Trump and Wall Street eye September as pressure mounts on Fed to cut rates
TOI World Desk | TIMESOFINDIA.COM | Jul 16, 2025, 00:48 IST
( Image credit : AP )
Highlight of the story: Amidst economic volatility and presidential pressure, the Federal Reserve is weighing potential interest rate cuts. President Trump urges immediate action, citing low consumer prices, while markets anticipate a September reduction. However, the Fed remains cautious, seeking more data on inflation and employment before making any decisions, especially with evolving trade policies impacting prices.
With the U.S. economy navigating a volatile mix of inflation concerns and trade policy uncertainty, all eyes are now on the Federal Reserve’s next moves. President Donald Trump has publicly urged the Fed to cut interest rates immediately, while traders are increasingly betting that the central bank could deliver a rate cut as early as September.
In a post on Truth Social Tuesday morning, President Trump declared, “Consumer Prices LOW. Bring down the Fed Rate, NOW!!!” His call came just hours after the Bureau of Labor Statistics reported that consumer prices rose by 2.7 percent in June compared to a year earlier, while core inflation—excluding food and energy—climbed 2.9 percent. Both figures were broadly in line with expectations, but they triggered fresh debate over whether the Fed will act sooner rather than later.
The next two meetings of the Federal Open Market Committee (FOMC), the body responsible for setting U.S. interest rates, are scheduled for July 29–30 and September 16–17. While only a 5 percent chance of a July rate cut is currently priced into markets, traders continue to place a 60 percent probability on a reduction in September, according to interest rate futures.
Despite the political pressure, Federal Reserve Chair Jerome Powell and other central bank officials have indicated they are not rushing to lower rates. Most policymakers say they want to see more data, particularly on inflation trends and employment, before pulling the trigger.
The June consumer price index revealed the largest monthly jump in inflation in five months, rising 0.3 percent from May. Analysts say the spike is being fueled in part by new import tariffs enacted by the Trump administration, which are driving up costs on everything from coffee to home electronics. Some economists warn that inflation could continue climbing if more tariffs go into effect, including those Trump has threatened to impose on additional goods from August 1.
The underlying challenge for the Fed is to determine whether this surge in prices is a temporary adjustment or a sign of more persistent inflationary pressure. With Trump’s trade policy continuing to evolve—often unpredictably—the Fed’s ability to forecast inflation with confidence remains limited.
While consumer confidence and employment numbers have remained stable, the economy is showing signs of cooling. A growing number of economists expect the Fed to wait until September to make a move, in hopes of better understanding whether the current inflation is transitory or here to stay.
In the meantime, markets are expected to remain on edge, with investors parsing every word from Powell and his colleagues in the lead-up to the next two policy meetings. Whether the Fed can resist both political pressure and mounting economic uncertainty remains one of the biggest financial questions of 2025.
In a post on Truth Social Tuesday morning, President Trump declared, “Consumer Prices LOW. Bring down the Fed Rate, NOW!!!” His call came just hours after the Bureau of Labor Statistics reported that consumer prices rose by 2.7 percent in June compared to a year earlier, while core inflation—excluding food and energy—climbed 2.9 percent. Both figures were broadly in line with expectations, but they triggered fresh debate over whether the Fed will act sooner rather than later.
The next two meetings of the Federal Open Market Committee (FOMC), the body responsible for setting U.S. interest rates, are scheduled for July 29–30 and September 16–17. While only a 5 percent chance of a July rate cut is currently priced into markets, traders continue to place a 60 percent probability on a reduction in September, according to interest rate futures.
Despite the political pressure, Federal Reserve Chair Jerome Powell and other central bank officials have indicated they are not rushing to lower rates. Most policymakers say they want to see more data, particularly on inflation trends and employment, before pulling the trigger.
The June consumer price index revealed the largest monthly jump in inflation in five months, rising 0.3 percent from May. Analysts say the spike is being fueled in part by new import tariffs enacted by the Trump administration, which are driving up costs on everything from coffee to home electronics. Some economists warn that inflation could continue climbing if more tariffs go into effect, including those Trump has threatened to impose on additional goods from August 1.
The underlying challenge for the Fed is to determine whether this surge in prices is a temporary adjustment or a sign of more persistent inflationary pressure. With Trump’s trade policy continuing to evolve—often unpredictably—the Fed’s ability to forecast inflation with confidence remains limited.
While consumer confidence and employment numbers have remained stable, the economy is showing signs of cooling. A growing number of economists expect the Fed to wait until September to make a move, in hopes of better understanding whether the current inflation is transitory or here to stay.
In the meantime, markets are expected to remain on edge, with investors parsing every word from Powell and his colleagues in the lead-up to the next two policy meetings. Whether the Fed can resist both political pressure and mounting economic uncertainty remains one of the biggest financial questions of 2025.