Trump has called for the Fed to cut rates, expressing a sense of better monetary policy.

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By Michael S. Derby and Dan Burns

(Reuters) – U.S. President Donald Trump said on Thursday he wanted the Federal Reserve to cut interest rates amid an indefinite shutdown of the central bank, saying he would do better than those charged with setting monetary policy.

“I’m calling for interest rates to come down as fast as oil prices are going down, and they should be going down all over the world,” Trump told the World Economic Forum in Davos, Switzerland, on Thursday.

“I think I know interest rates better than they do, and I certainly think I know better than the person who is primarily responsible for making that decision,” Trump said at a White House event following those comments. Referring to Federal Reserve Chairman Jerome Powell, whom Trump appointed as the head of the Fed during his presidency.

Trump’s comments come five days before the Fed’s first policy meeting of the administration — on Jan. 28 and 29 — amid broad expectations officials will leave rates unchanged.

The Fed lowered its overnight interest rate target by a quarter percentage point to between 4.25% and 4.5% at its policy meeting last December.

For all of 2024, the Fed has kept rates lower by a whole percentage point, amid easing inflation and a desire among Fed officials to place monetary policy less of a constraint on the economy’s pace. December 2025 saw authorities revise down their projections for a slowdown in 2025 amid expectations of higher inflation and slightly better growth.

Trump’s comments on the Fed’s interest rate policy are highly unusual for presidents in the modern era and are at odds with the agency’s interest rate policy-making independence. The federation, which is not expected to follow any directive from the president, did not immediately respond to a request for comment.

Policy uncertainty

A number of federal officials, including Powell, have expressed caution about reducing inflation further due to stuck inflation. Several policymakers sought to take Trump’s policies into account in new forecasts given at the December policy meeting. At a time when inflation is still above the Fed’s 2% target, inflation may worsen rather than improve.

Speaking last week, New York Fed President John Williams said uncertainty surrounding government policy measures makes it difficult to provide guidance on the outlook for monetary policy, particularly at this time.

“The economic outlook is very uncertain, particularly around monetary, trade, immigration and regulatory policies, so our decisions on future monetary policy actions will be based on the overall state of the data, the evolution,” Williams said. Risks related to our economic outlook and the achievement of our dual mission objectives.

Trump’s pursuit of large-scale tariffs on U.S. trading partners, which are actually taxes on imports, and his plan to deport large numbers of undocumented immigrants are likely to trigger a rebound in inflation, according to many economists and investors. The question then becomes whether Fed officials believe the rate hike is a one-off or the start of a more sustained hike that would require higher interest rates.

Some Fed officials believe that enough transparency to return to low rates could soon lead to inflation. Referring to recent favorable inflation data, Fed Governor Christopher Waller told CNBC on January 16, “If we continue to get numbers like this, it’s reasonable to think that rate cuts could happen in the first half of the year.”

Waller, Trump’s choice to be the Fed governor and take office in 2020, is also skeptical that Trump’s proposed trade tariffs will trigger inflation in the way that many economists expect. On Jan. 8, he said, “If tariffs do not have a significant or sustained impact on inflation, as I expect, they will not affect my view on appropriate monetary policy.”

Trump has widely criticized the Fed for raising rates in the first two years of his first term in office and criticized Powell, whom Trump promoted to head the U.S. central bank, for leading the effort. Powell’s term as Fed chair expires in 2026, and Trump has said he has no intention of removing Powell early before he takes office, prompting legal questions about whether such a move would even be possible.

(Reporting by Dan Burns, Michael S. Derby, Katherine Jackson and Trevor Hunnicutt; Editing by Chizu Nomiyama and Deepa Babington)