“There is no inflation”, Trump sends out a message urging another rate cut! Fed to meet behind closed doors

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In a fiery post, Trump touted falling oil and food prices and blamed the Federal Reserve for not moving quickly enough to cut interest rates.

On Monday, as the specter of tariffs continued to weigh on global markets, Trump posted on Truth Social: “Oil prices are falling, interest rates are falling (the slow-acting Fed should cut rates!), food prices are falling, and there is no inflation. , food prices are also falling, there is no inflation. With the tariffs already in place, the U.S., which has long been squeezed by other countries, gets billions of dollars a week in revenue from the countries that are squeezing us.”

Last week, Trump imposed tariffs on several countries, a move that triggered retaliatory measures from the other side. Since then, the U.S. stock market has collapsed, with futures prices linked to the Nasdaq index, which is dominated by tech stocks, falling to their lowest level since January 2024. Other risk assets have not been immune, with the price of bitcoin falling below $75,000 early Monday.

Risk aversion, coupled with OPEC+’s plans to increase production, sent the price of WTI crude oil down 16% in four trading days to $60 a barrel. It is well known that falling crude oil prices can put counter-inflationary pressures on the global economy.

However, numerous economists are pushing back against Trump’s claim of “no inflation,” noting that tariffs could push up consumer prices in the coming months. Meanwhile, the Federal Reserve remains cautious, resisting political pressure to cut rates quickly.

Despite the hand-crafted chaos, Trump and his top economic aides sent a series of provocative signals, “They’re eager to make a deal, and I said, ‘We’re not going to run a deficit with your country.’ We’re not going to do that, because to me, a deficit is a loss. We’re going to have a surplus, or in the worst case scenario, we’re going to break even,” he said.

U.S. Treasury Secretary Bessent, Commerce Secretary Lutnick and others were all fired up on Sunday, declaring that Trump would stick to his tariff agenda no matter what the markets did.

Trump’s economic “gamble” and the Federal Reserve’s response could shape the financial landscape in the coming months as global market turmoil and fears of recession intensify.

Trump’s tendency to call on the Fed to cut interest rates is in line with the market’s expectation that the Fed will price in five rate cuts this year. Potential Fed easing may help markets better digest the impact of Trump’s aggressive tariff policy, which is likely to continue for some time.

The Fed’s next scheduled Federal Open Market Committee (FOMC) meeting will be held on May 6th-7th. However, the Fed will hold a closed-door meeting of the Board of Governors on April 7, local time, according to the Fed’s official website. The meeting will be held on April 7 at 11:30 a.m. ET (11:30 p.m. BST) and will focus on reviewing and determining the advance and discount rates charged by the Fed banks.

The overnight interest rate swap market has already begun to digest the possibility of an emergency rate cut by the Fed, and the likelihood of a 25 basis point cut by the Fed next week is expected to be about 40%.