We Should Have Lowered Interest Rates says Trump: Q&A

President Donald Trump welcomed leaders of five African nations, hailing the continent’s economic potential as his administration seeks to expand US access to critical minerals and other natural resources.

“My administration is committed to strengthening our friendships in Africa through economic development efforts that benefit both the United States and our partners,” Trump said at a White House event with leaders from Gabon, Guinea-Bissau, Liberia, Mauritania and Senegal, kicking off a three-day summit.

He told reporters that he believes the US should lower interest rates already as well about the plans to ship weapons to Ukraine.

Close Federal Reserve watchers have a message for anyone who thinks the next leader of the US central bank will deliver lower borrowing costs on a silver platter: Don’t count on it.

While it’s an unlikely outcome, some investors have staked out positions in futures markets that will profit if interest rates drop immediately after Jerome Powell’s term as chair ends in May 2026. The trade has been fueled by President Donald Trump’s pledge to nominate “somebody that wants to cut rates.”

Those investors have targeted futures contracts linked to the Secured Overnight Financing Rate, or SOFR, which closely tracks the benchmark federal funds rate. They’ve sold off contracts that expire prior to Powell’s exit and piled into contracts that expire just after the expected arrival of a Trump-appointed chair.

It’s a trade that takes a chance on Trump getting his way, shrugging off how the central bank goes about setting rates.

A chair “can’t act like a dictator,” said Mark Gertler, an economics professor at New York University who has co-authored papers with former Fed Chair Ben Bernanke and former Vice Chair Richard Clarida. “He can’t call in the Marines or anything like that.”

Adjusting rates, Gertler pointed out, requires the support of a majority on the Federal Open Market Committee. Nineteen policymakers participate in FOMC meetings and 12 vote. In other words, the new chair will have to win over their colleagues with a reasonable case for cutting.

Contenders for the Fed chair job include former Fed Governor Kevin Warsh, Treasury Secretary Scott Bessent and National Economic Council Director Kevin Hassett, Bloomberg has reported. Current Fed Governor Christopher Waller is also an option, and former World Bank President David Malpass has also been floated.

A senior administration official said that Trump has been discussing names, including Warsh, Bessent and Hassett, among others, but no decision has been made.

Hassett on June 26 echoed Trump’s call for lower rates, and Warsh similarly said borrowing costs should come down in an interview with Fox Business on Monday. Bessent last week said the Fed’s previous economic models suggest they should have cut already.

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