FED Chair stated that Donald Trump’s tariff agenda has prevented him from lowering the interest rates. On Tuesday morning, while at the European Central Bank Forum in Portugal, the FED Chair Jerome Powell stated that Trump’s constantly changing tariff agenda was the core factor that prevented him from lowering the interest rate. When asked whether he would have lowered rates if it weren’t for Trump’s agenda, Powell responded, “I do think that’s right.”
Donald Trump and the FED chair Jerome Powell have been at loggerheads ever since Trump became president. The core factor? As you know, interest rates.
Since his re-election as the president of the United States of America, Donald Trump has been requesting the FED to lower the interest rates, so that he could usher in a pro-crypto era. Among his efforts to establish a cryptocurrency-friendly environment, Trump fired the SEC Chair, Gary Gensler, and thereafter appointed Paul Atkins in his stead to make the regulatory framework more crypto-friendly. Although Trump got the regulatory side of the market shaped according to his vision, however, it needs to be backed with financial support for his pro-crypto agenda to be established.
However, the FED has not been responding in Trump’s favor during the last 6 months when the Federal Open Market Committee (FOMC) gathered to decide on the interest rates. As such, Trump threatened to fire Jerome Powell from his position, besides calling him with abusive names.
So, what does the interest rate have to do with crypto adoption?
When the FED increases the interest rates, the cost of borrowing money, or loans increases. This will not be conducive for investors and they would not be willing to invest in risky assets like crypto, after borrowing money at high interest rates. For this reason, Trump was insisting on Powell to cut rates.
