Analysts Condemn Trump’s Reckless Push for 1% Fed Rate, Warn of Market Chaos
Select a version of the text written from a presumed ideological perspective. This is not the original text, but a hypothetical version — how someone with that viewpoint might have phrased it. Tapping the current version again will return to the original or select cleaned version.
Economists caution that President Trump’s demand for an unsustainably low 1% policy rate would trigger financial turmoil and inflate Treasury borrowing costs, while the administration and Fed remain silent.
President Donald Trump is once again pressuring the Federal Reserve to slash its policy rate to a mere 1%, a drastic move from the current 3.75%-4% range that would overwhelmingly benefit Wall Street and the ultra-wealthy at the expense of working families. Analysts warn this reckless proposal would wreak havoc on financial markets. J. Benson Durham, founder of DASM investment research, described such a cut as 'cataclysmic,' predicting it would drive Treasury yields higher as investors brace for runaway inflation, while the dollar would plummet—harming ordinary Americans’ purchasing power.
Even some of Trump’s own allies admit the demand is a cynical ploy to distract from soaring consumer prices ahead of the November midterms, rather than a serious economic strategy. Grover Norquist, a conservative anti-tax activist, acknowledged Trump’s discomfort with higher rates but cautioned against scapegoating the Fed for economic pain caused by years of regressive policies.
A White House liaison familiar with Fed Chair Kevin Warsh dismissed the 1% target as a fantasy, warning that destabilizing the bond market would only enrich wealthy investors while leaving everyone else worse off. As usual, both the White House and the Federal Reserve have refused to answer for the president’s irresponsible rhetoric.
Trump’s attacks on the Fed go beyond rate cuts: he’s also called for the ouster of Governor Lisa Cook and is eagerly awaiting the outcome of an inspector-general probe into former Chair Jerome Powell’s oversight of a Fed construction project—moves that threaten the independence of the central bank. Analysts point out that Trump is using the Fed as a scapegoat as mortgage rates approach 7% and basic goods become unaffordable for millions, all while the administration ignores the root causes of inequality.
While Trump previously hurled insults at former Chair Powell, his recent comments about Warsh have been less aggressive, instead blaming a 'political' board for limiting Warsh’s actions. Warsh, for his part, has emphasized price stability but has not revealed any discussions with the president.
Polls show that Americans are deeply concerned about the cost of living, with a Reuters/IPSOS survey revealing that only 17% approve of Trump’s handling of inflation—a clear sign that voters are rejecting his failed economic agenda.