Donald Trump calls for 2.5-percentage-point reduction in Fed rates

US President Donald Trump calls for a 2.5-percentage-point cut in the Federal Reserve’s (Fed) rates to boost GDP growth. Such a reduction would be unprecedented, as the American central bank tends to adjust borrowing costs by a quarter point. 

The regulator kept rates on hold at its meeting on June 18. Policymakers said the US economy remains resilient, yet price direction is hard to determine, in part because of Trump’s tariffs. 

According to central bank governor Jerome Powell, the Fed is now focused on maintaining low inflation and high job growth. Additionally, monetary policy is well positioned to respond to economic developments in a timely way.

Fed officials project two quarter-point cuts this year, which will bring rates to the range between 3.75% and 4%. Still, Trump insists on larger-scale easing, noting low inflation. 

However, Powell argues that prices could rise in the coming months as US companies begin selling goods imported after the imposition of duties. The Fed chief also emphasizes the intention of many firms to pass tariff costs to consumers.