US Fed to cut interest rates again? Donald Trump seeks lower rates by raising energy production; Here’s what experts say

US President Donald Trump said Thursday he would seek to bring interest rates lower by unleashing energy production, and would speak to the Federal Reserve if needed.

“I’ll demand that interest rates drop immediately,” he told the World Economic Forum in Davos, Switzerland, in a virtual address. “Likewise, they should be dropping all over the world. Interest rates should follow us all over.”

The US Federal Reserve has a dual mandate from Congress to act independently to keep inflation and employment in check, primarily by raising and lowering the level of short-term interest rates.

As US president, Trump does not have a say over interest rate decisions, a fact that he has frequently criticized.

Trump told reporters in Washington later on Thursday that he would like to see interest rates come down “a lot,” adding that lower oil prices should help them to fall.

“When the oil comes down, it’ll bring down prices, he said. “Then you won’t have inflation, and then the interest rates will come down.”

Asked what he would do if the Fed did not lower interest rates, Trump said he would “put in a strong statement” and expected officials to listen to his views, adding that he would consider talking to Fed chair Jerome Powell if needed.

“I think I know interest rates much better than they do,” he said. “And I think I know certainly much better than the one who’s primarily in charge of making that decision. I’m guided by them very much, ” he added. “But if I disagree, I will let it be known.”

Trump’s remarks come five days before the Fed’s first policy meeting to be held during his administration – on Jan. 28 and 29 – with very broad expectations officials will leave rates unchanged.

The Fed last cut its overnight interest rate target by a quarter percentage point at its December policy meeting to between 4.25% and 4.5%.

For all of 2024, the Fed lowered rates by a full percentage point amid easing inflation pressures and a sense among Fed officials that they wanted monetary policy to exert less restraint on the economy’s momentum. The December meeting also saw officials trim estimates of cuts in 2025 amid expectations of higher levels of inflation and slightly better growth.

Trump’s comments on Fed interest rate policy are highly unusual for presidents in the modern era and conflict with the agency’s design of setting interest rate policy independently. The Fed, which does not have to follow any instructions from the president, did not immediately respond to a request for comment.

Global financial advisory giant deVere Group issued a stark warning to investors to prepare for significant turbulence as the US Federal Reserve may find itself at odds with the economic consequences of US President Trump’s fiscal policies. 

Growing inflationary pressures are likely to reappear, and the US Fed’s potential response could signal a seismic shift in financial markets.

According to experts, President Trump has doubled down on his ambitious fiscal stimulus agenda, tax cuts, and an expansive tariff regime since taking office. While these measures aim to stimulate economic growth, they have also reignited concerns about inflationary pressures, which remain stubborn.

This potential battle is not unprecedented. During Trump’s previous presidency, his frequent clashes with the US Fed over monetary policy were well-documented. 

The battle lines are likely already being drawn between the Fed and the White House, and investors should prepare for the fallout,” warns Nigel Green, CEO of deVere Group. 

“President Trump’s policies are creating the perfect storm of inflationary pressures, and the Fed may have no choice but to act. This could trigger significant market volatility.”

This copy is being updated