President Trump urges Fed to cut rate after jobs data — Cyprus Mail

In the United States, President Donald Trump, following the publication of employment data, called on the Federal Reserve to cut interest rates. In a post on Truth Social, he said that American employers added 162,000 jobs in August and insisted that the United States should have the lowest rate in the world. This was stated in a Cyprus Mail column.

Trump linked lower rates to the country’s creditworthiness and said that high rates put the United States at a disadvantage. He also threatened to stop trading with countries with which the United States has a trade deficit if the Fed does not cut the rate.

The Fed’s decision and inflation

The column’s author notes that on September 16, the Fed unanimously raised the federal funds rate by 0.25 percentage points, contrary to the president’s position. According to the data cited in the material, annual consumer price inflation in the United States was 3.4% in August, the same as in July.

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The article also states that the yield on 10-year U.S. Treasury bonds exceeded 5% and reached its highest level since 2007. Since bond prices and their yields move in opposite directions, a decline in the value of securities means an increase in yields.

Reasons for rising yields

The columnist gives several explanations for the rise in rates: inflation expectations amid government deficits, high demand for borrowing and labor due to investments in artificial intelligence, and the diversification of assets by some traditional buyers of U.S. securities in favor of gold.

In the author’s view, a country’s creditworthiness alone does not mean that its central bank should set the lowest rate. The level of rates depends on inflation, the state of the economy, fiscal policy, market expectations, and investors’ willingness to hold assets in that currency.