Trump Pressures the Fed: Calls for Rate Cuts After Weak Inflation Data

President Donald Trump has once again urged the Federal Reserve to cut interest rates following fresh data showing cooling inflation in the United States. December figures put annual inflation at 2.7%, which Trump says clearly supports a more accommodative monetary stance. In a post on Truth Social, Trump described the inflation reading as “great” and called on Fed Chair Jerome Powell to move quickly and deliver meaningful rate cuts. According to Trump, further delays would restrain economic growth and unnecessarily raise borrowing costs for businesses and households.

CPI Data Reinforces Signs of Easing Price Pressures Trump’s comments came shortly after the release of the December Consumer Price Index (CPI), which showed inflation remaining stable and not accelerating beyond market expectations. An even stronger signal came from core CPI, which excludes food and energy prices. Core inflation fell to 2.6% year over year, coming in below expectations and reinforcing the view that pricing pressures in the U.S. economy are gradually easing. Trump cited the CPI data as evidence that the Fed is falling behind economic reality, suggesting that rate cuts could stimulate growth, boost demand, and encourage lending activity.

Markets Turn Optimistic, Bitcoin Jumps The inflation report had an immediate positive impact on financial markets. Shortly after the data was released, Bitcoin surged above $92,000, signaling renewed risk appetite among investors. Lower interest rates typically: increase system liquiditysupport equity marketsbenefit risk-sensitive assets, including cryptocurrencies As a result, market optimism has grown around the idea that 2026 could bring monetary easing, provided inflation remains under control.

The Fed Remains Cautious for Now Despite political pressure, an immediate rate cut appears unlikely. The CME Group FedWatch tool suggests markets currently expect the Fed to hold rates steady at its next meeting. According to the latest probabilities: there is roughly a 95% chance that rates will remain unchanged at the January meetingonly a small probability is assigned to a 25-basis-point cut Can the Fed Resist Trump’s Pressure? Recent Fed meeting minutes indicate policymakers want to see additional, sustained evidence of declining inflation before taking further action. This caution follows a series of rate cuts implemented last year. Major banks share a similar view. JPMorgan, for example, no longer expects near-term Fed rate cuts, even after softer inflation reports. Some Fed officials have also pointed to uncertainty around fiscal policy and tariffs, noting that their potential impact on prices remains unclear.

Political Signals and Market Expectations Statements from a sitting U.S. president often have a meaningful influence on market sentiment, and traders closely monitor Trump’s remarks as potential signals of future policy direction. If inflation remains stable or continues to decline, expectations for rate cuts could strengthen as the year progresses. The latest CPI report has therefore provided strong support for those arguing that the Fed should begin easing monetary policy sooner rather than later.

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