Trump Calls for 300-Basis-Point Rate Cut to Ease Borrowing Costs, Fed Resists, Market Sees 2.6% July Cut Chance

U.S. President Donald Trump’s visit to the Federal Reserve on July 15, 2025, escalated his public campaign for aggressive interest rate reductions, with the urging a 300-basis-point cut to stimulate the economy. During the tour, Trump cited Switzerland’s 0.50% benchmark rate as a model, arguing the U.S. should adopt similarly low rates to ease housing and borrowing costs for Americans. “We should be like Switzerland,” he stated, emphasizing that the U.S. economy—described as “strong”—could afford such cuts without sparking inflation [1]. His remarks align with a broader push to position rate reductions as a solution to middle-class financial pressures, particularly as mortgage and business loan rates remain elevated [2].

The visit, however, underscored growing tensions between Trump’s demands and the Federal Reserve’s cautious approach. While Trump framed his call for cuts as a data-driven policy move, Fed Chair Jerome Powell maintained that monetary decisions must prioritize inflationary risks and economic stability. Trump’s argument that falling oil prices justify immediate action was met with measured responses, as Powell reiterated the central bank’s commitment to a wait-and-see strategy [4]. The visit also took a tangential turn when Trump raised concerns about the Fed’s $10 billion renovation project, prompting Powell to clarify discrepancies in the ’s claims [6].

Internally, the Fed faces shifting dynamics. For the first time in nearly 30 years, two governors—Michelle Bowman and Christopher Waller—are expected to support rate cuts at the upcoming July 29–30 meeting. This departure from consensus highlights divisions within the central bank, with some officials leaning dovish amid easing inflation and stable labor markets [3]. Meanwhile, San Francisco Fed President Mary Daly’s comments that Trump’s tariffs have not significantly boosted inflation have fueled speculation about two rate cuts in 2025 [5].

Market expectations, however, remain skeptical. CME FedWatch data indicates just a 2.6% chance of a rate cut in July, as traders anticipate rates will hold steady between 4.25% and 4.5% for now. Analysts warn that Trump’s direct pressure on Powell risks undermining the Fed’s independence, a cornerstone of U.S. monetary policy. The Wall Street Journal noted that such interference could paradoxically raise long-term borrowing costs by eroding investor confidence in the Fed’s credibility [3].

Powell’s position is further complicated by external pressures. A criminal referral to the Department of Justice over the Fed’s renovation costs has intensified scrutiny, with Rep. Anna Paulina Luna demanding investigations into potential misuse of funds. While Trump clarified during the visit that he has no current plans to replace Powell, the political narrative around the Fed’s autonomy has intensified [7].

The debate over rate cuts reflects broader tensions between political priorities and institutional independence. Trump’s advocacy mirrors public demands for relief in mortgage and business loan markets but clashes with the Fed’s dual mandate of price stability and maximum employment. Analysts caution that prolonged low rates could erode long-term economic resilience, particularly if inflationary risks resurface. The Fed’s ability to navigate these pressures while maintaining its credibility remains a critical test for its leadership [9].

Sources:

[1] [Donald Trump Urges Powell to Cut Rates During Fed Visit](https://coingape.com/donald-trump-urges-powell-to-cut-rates-during-fed-visit/)

[2] [Fed Visit: Donald Trump Calls for Aggressive Rate Cuts to ...](https://coincentral.com/fed-visit-donald-trump-calls-for-aggressive-rate-cuts-to-boost-economy/)

[3] [Trump, Scott: Americans need lower interest rates to afford ...](https://www.kten.com/news/trump-scott-americans-need-lower-interest-rates-to-afford-homes/article_6192eb21-7a5a-5043-8133-2101632194b0.html)

[4] [Trump keeps pressure on Powell with rare visit to central ...](https://www.wfxg.com/news/trump-keeps-pressure-on-powell-with-rare-visit-to-central-bank/article_c3a223b2-c463-5547-ab0a-0d8bad789946.html)

[5] [Trump’s visit to Fed caps long-running fight over interest rates](https://www.usatoday.com/story/money/2025/07/24/trump-fed-visit-interest-rates-fight/85362302007/)

[6] [Fed chair tells Trump he has his facts wrong on central ...](https://www.gazettextra.com/news/nation_world/fed-chair-tells-trump-he-has-his-facts-wrong-on-central-banks-renovation-costs/article_93bb49f4-a1e9-53b5-a8ca-55550df261c2.html)

[7] [Trump and Powell bicker over Fed building renovations as ...](https://wsvn.com/news/politics/trump-and-powell-bicker-over-fed-building-renovations-as-president-ratchets-up-pressure-campaign/)

[9] [Trump will visit Federal Reserve in escalation of campaign ...](https://www.telegraphherald.com/magazine-websites/biztimes/ap_wire/article_1946eaec-e471-5a49-b5eb-57ae6fa029a.html)