President Demands 3% Interest Rate Cut, Calls for Fed Control

The President of the United States has called for the Federal Reserve Board to seize control of the central bank from the Chairman, citing the need for significant interest rate reductions to stimulate economic growth and alleviate debt burdens. This move comes amidst ongoing tensions between the administration and the Federal Reserve, with the President expressing frustration over the central bank's monetary policy decisions.

The President's remarks, made on a social media platform, accused the Chairman of being obstinate and not acting in the best interests of the economy. The President believes that a substantial reduction in interest rates would lead to stronger economic growth and lower debt repayment costs for the federal government and homeowners. Despite the Chairman's assertion that inflation is under control, the President maintains that there is no significant inflationary pressure, despite the central bank's preferred inflation gauge showing a 2.6% annual rate, slightly above the 2% target.

The President has advocated for a 3 percentage point reduction in the Federal Reserve's benchmark interest rate, which currently stands at an average of 4.33%. However, such a drastic cut could pose risks, as an influx of funds into the economy could exceed its absorption capacity, potentially leading to accelerated inflation. The President's call for the Federal Reserve Board to take control of the central bank marks a significant escalation in the ongoing tensions between the administration and the Federal Reserve. The President's remarks suggest that the administration is willing to use its executive powers to influence the Federal Reserve's decisions.

In May, the Supreme Court hinted that the President could not remove the Chairman due to policy disagreements. This has led the White House to explore whether the Chairman could be dismissed for cost overruns in a 25 billion dollar renovation project. The Chairman's term is set to end in May 2026, at which point the President could nominate a successor, subject to Senate confirmation.