“Trump Blasts Jerome Powell’s 50 Bps Rate Cut: ‘It’s Proof the Economy Is in Shambles!’”

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In the run-up to the presidential election, Donald Trump, the Republican nominee, has voiced his disapproval of the Federal Reserve’s recent decision to slash its benchmark interest rate by half a percentage point. Trump suggests this move could be indicative of a faltering U.S. economy or a politically motivated action.

What Happened: Trump expressed skepticism over the Federal Reserve’s decision. This critique comes as the November presidential election is just around the corner, reported The Financial Times.

“I guess it shows the economy is very bad to cut it by that much, assuming that they are not just playing politics,” said Trump.

Trump has previously voiced his displeasure with Federal chair Jerome Powell, accusing the independent central bank of political bias. In a conversation with Bloomberg News, Trump cautioned Powell against reducing interest rates before the election. However, he also mentioned that he would allow Powell to complete his term as chair if he was “doing the right thing.”

In a separate discussion with Fox Business Network, Trump hinted at his intention to replace Powell, blaming him for being “political” and predicting he would lower interest rates to “help the Democrats,” according to the report.

Trump’s remarks were made just hours before a campaign rally in the suburbs of New York City on Long Island. His Democratic rival, vice-president Kamala Harris, also reportedly shared her thoughts on the Fed’s decision, stating the cut would be “welcome news for Americans who have borne the brunt of high prices”.

Why It Matters: The Federal Reserve’s decision to cut interest rates by 50 basis points marks the first rate cut in over four years, breaking a streak of 12 consecutive months with rates held steady. This decision came as a surprise to Wall Street analysts who had largely anticipated a more modest 25-basis-point cut.

Earlier this month, Trump had expressed his desire for the Federal Reserve to leave rates unchanged ahead of the 2024 presidential election. However, investors and members of Congress were expecting a rate cut.

The anticipation among investors for a 50 basis point interest rate cut was growing, and this expectation could have influenced the Federal Reserve’s decision. The market was pricing in a 63% likelihood of a 50 basis point cut, a significant increase from 34% the previous week.

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