Trump demands Fed rate cut, reasserts pressure

US President Donald Trump on Friday demanded that the Federal Reserve cut interest rates, threatening to halt trade with countries with which the United States has a deficit if the central bank does not lower borrowing costs.

Trump made the threat in a Truth Social post shortly after the release of a much stronger-than-expected August jobs report, which showed that US employers added 162,000 jobs last month.

Trump also urged Federal Reserve Chair Kevin Warsh and the central bank's board to "get smart" and cut interest rates.

The Federal Reserve declined to comment on Trump's post.

The stronger-than-expected jobs report also boosted market expectations for a rate hike ahead of the Fed's upcoming meeting starting on Sept 15. Reuters reported that traders were pricing in about a 65 percent chance of a rate hike following the report.

The report could give the Fed greater room to raise interest rates as policymakers weigh continued labor-market strength against inflation. The Fed's decision will also be influenced by inflation data due next week.
Trump also cited the Supreme Court's February ruling on his tariffs in arguing that he retains authority to restrict trade. The court struck down his sweeping tariffs imposed under the International Emergency Economic Powers Act (IEEPA), ruling that the law does not authorize the president to impose tariffs. The decision, however, distinguished tariffs from other restrictions on imports, including prohibitions.

Trump has defended his tariff policy on the theory that it will reduce the trade deficit and bolster domestic manufacturing.

The latest data showed that the US trade deficit in goods and services widened to its largest gap in 16 months in July. The monthly deficit, the difference between what the US imports and what it exports, reached $88.6 billion, according to data released by the Commerce Department on Thursday.

After the Supreme Court invalidated his IEEPA tariffs in February, Trump turned to other trade laws to impose replacement measures.

Any move to halt trade with countries running trade surpluses with the US would likely face legal challenges.

The Trump administration has intensified pressure on the Federal Reserve, which operates independently in setting monetary policy. Trump has repeatedly criticized the central bank over its interest-rate decisions and previously targeted former Fed Chair Jerome Powell.
Trump's latest comments come after he had appeared to ease public pressure on the Fed after Warsh took over as chair. Friday's post renewed that pressure.
Kevin Hassett, the White House economic adviser, said earlier on Friday that the jobs report strengthened the case for keeping interest rates unchanged.

"We respect the Fed's independence, but I think the argument for holding steady would be pretty strong," Hassett said on CNBC.

Agencies contributed to the story.