Trump Demands 3% Rate Cut to Spur Growth as Fed Balances Political Pressure and Inflation Risks

President Donald Trump has escalated his public demands for the Federal Reserve to implement a significant reduction in interest rates, calling for a cut of at least 3 percentage points. The president has framed the issue as a critical step to stimulate economic growth, arguing that current monetary policy hinders progress. His remarks, which include direct criticism of Fed Chair Jerome Powell, have intensified political tensions and raised questions about the central bank’s independence.

Trump’s public statements, including a recent assertion that Powell “would be out pretty soon anyway,” reflect a growing push for aggressive rate cuts. The administration has cited recent economic data—such as cooling inflation and sustained job growth—as justification for reducing the federal funds rate. Treasury Secretary Sylvia Mathews Bassett has aligned with the president’s stance, reinforcing the administration’s position that lower rates could save the nation “hundreds of billions of dollars” and spur economic activity.

While the Federal Reserve maintains a dual mandate of fostering employment and controlling inflation, internal divisions are evident. Governor Christopher Waller, typically a hawkish voice, has unexpectedly advocated for a moderate rate cut of approximately 3%. However, his position faces resistance from colleagues who remain cautious about inflationary risks. Analysts note that the Fed’s upcoming decisions will likely balance political pressures with data-driven assessments of labor market and price trends.

The president’s rhetoric has already influenced market sentiment, with crypto assets such as Bitcoin and XRP experiencing notable price increases. The administration has linked these developments to broader efforts to strengthen the U.S. crypto footprint, including recent applications for crypto ETFs by entities like TMTG. While the Fed’s response remains uncertain, markets are closely watching for signals that could reshape fiscal policy and institutional adoption of digital assets.

Critics warn that rapid rate cuts could jeopardize progress in curbing inflation, potentially reigniting concerns over economic overheating. Trump, however, dismisses these concerns, framing the debate as a battle between economic pragmatism and bureaucratic resistance. His threats to remove Powell, despite legal limitations on presidential authority over the Fed, highlight the political stakes. The outcome of this standoff could determine the trajectory of U.S. monetary policy and the Fed’s credibility in maintaining institutional independence.

As the administration pushes for rate cuts, the Fed’s ability to navigate political pressures while adhering to its mandate will be pivotal. The coming months will test whether the central bank can balance growth-oriented policies with its commitment to price stability. Market observers anticipate heightened volatility in financial and crypto sectors, with potential regulatory and policy shifts shaping the economic landscape.