Trump Says Fed Would Be 'Much Better Off' Lowering Rates As Tariffs Start

Economic

Forex

Summary:

President Donald Trump waves after announcing Federal Reserve board member Jerome Powell as his nominee for chair of the Federal

President Donald Trump waves after announcing Federal Reserve board member Jerome Powell as his nominee for chair of the Federal Reserve in 2017. (Photo by Jabin Botsford/The Washington Post via Getty Images) · The Washington Post via Getty Images

President Trump once again turned up the pressure on the Federal Reserve, saying Wednesday evening on social media that the central bank would "be much better off" lowering interest rates as tariffs go into effect.

The comments on Truth Social came after the Fed held interest rates steady Wednesday for the second meeting in a row and maintained a prior prediction for two rate cuts at some point this year.

What the central bank did change, however, was its outlook on inflation (higher) and economic growth (lower), with Fed Chair Jerome Powell saying that a driving reason for the change was uncertainty stemming from Trump's plans for an aggressive slate of new tariffs on top of new duties already imposed on China, Canada, and Mexico.

The president has promised to unveil "reciprocal" tariffs on many countries April 2, which he has taken to calling "liberation day."

"The Fed would be MUCH better off CUTTING RATES as U.S.Tariffs start to transition (ease!) their way into the economy," Trump said in his post on Truth Social. "Do the right thing. April 2nd is Liberation Day in America!!!"

Powell did not shy away from the impact of Trump’s tariffs during a highly anticipated press conference Wednesday.

The Fed chairman said in no uncertain terms that Trump's trade agenda would be likely to drive up prices, even amid considerable uncertainty about exactly how much — and whether the price changes would be "transitory."

In just one example Wednesday afternoon during a question about price stability, Powell said that inflation had previously neared the Fed's key goal but now "I do think with the arrival of the tariff inflation, further progress may be delayed."

Some analysts raised questions about the Fed's unchanged overall prediction of two cuts this year even as Trump's trade policy has roiled markets and cut back projections of economic growth for the remainder of the year.

"We continue to think that Fed officials are underestimating the extent to which tariffs are likely to push up inflation," Capitol Economics said in a note immediately after Wednesday's decision but before the press conference.

At other points in his press conference Wednesday, Powell also said that the exact effects of tariffs on prices were uncertain, may never be exactly known, and could even be temporary.

He called the price effects of tariffs potentially "transitory" — reusing a much-scrutinized word that was deployed by the Fed and other economic officials in 2021 as prices started to rise during Joe Biden's presidency.

Powell then called a transitory effect on prices "kind of the base case but we really can't know that" as he maintained the Fed's long-held wait-and-see approach to actually responding to Trump's still unfolding economic agenda.

It was a term that many — especially Trump allies — criticized for years after it was used only to see rising prices last longer than expected.

Trump's team has begun to use similar language to say any price effects from tariffs will be temporary and that the economy is in a "transition."

"Tariffs are a one-time price adjustment," Treasury Secretary Scott Bessent said in another recent example.

Trump’s pointed comments on rates follow a period when Trump has softened his criticisms of the Fed's monetary policy decisions and even made it clear he doesn’t intend to fire Powell, someone he criticized repeatedly during his first term.

Bessent and other Trump aides have repeated said that the president is not focused on the Fed and is instead trying to bring down 10-year Treasury yields.

"Notice that he has stopped calling for the Fed to cut rates," Bessent said during a speech earlier this month, referring to the president.

But it's clear the White House does want a closer relationship with the central bank — and other independent agencies — after issuing a new executive order last week that gives Trump's appointees more power over such agencies.

The new order makes clear that monetary policy — the direction of interest rates — will remain under the Fed's full control, but that the Fed's oversight of the country's biggest banks will now have a closer connection to the policies and priorities of the White House.

Powell was asked at his press conference Wednesday if Trump’s recent firings of board members at the FTC, another independent agency, loomed as a threat to the Fed’s independence as well.

“I did answer that question” he said, referring to comments made last November that any removal of Powell is “not permitted by law.”

“I have no desire to change that answer and have nothing new on that for you today.”

Source: Yahoo Finance

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Risk Warnings and Disclaimers

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Michelle

Cryptocurrency

Ethereum (ETH) is currently trading at $2014, having successfully broken through the $1950 resistance level, which has now turned into a key support zone. The $2000 level is crucial in determining whether ETH continues its upward trajectory or faces a pullback. If this support holds, buyers may gain momentum to push the price higher. However, failure to maintain this level could trigger a deeper retracement.

Key Support and Resistance Levels

Support Levels: $2000, $1950, $1800
Resistance Levels: $2150, $2225

Bullish Outlook: Targeting $2225 and Beyond

If Ethereum (ETH) remains above the $2000 support, bullish momentum may build, driving the price toward $2150, a critical resistance point. A decisive break above $2150 could spark a further rally, sending ETH toward the $2225 resistance level.

At $2225, some traders may take profits, leading to a temporary pullback. However, if buyers sustain their pressure, Ethereum (ETH) could maintain its bullish momentum, setting the stage for a long-term uptrend.

Bearish Outlook: Potential Drop to $1800

If ETH fails to hold $2000, increased selling pressure could drive it back to the $1950 support zone. A break below this level may result in further downside movement, with ETH potentially sliding to $1800, a crucial support area.

Should bearish momentum persist, Ethereum (ETH) could experience a more extended decline, testing even lower levels before stabilizing.

However, Ethereum’s (ETH) next move largely depends on how it reacts to the $2000 support level. A strong rebound from this zone could fuel a rally toward $2150 and $2225, while a breakdown might trigger a decline to $1800. Traders should monitor these levels closely as ETH prepares for its next significant move.

Source: CryptoSlate

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Glendon

Commodity

(Bloomberg) -- Oil erased gains as global markets were buffeted by mixed signals from the Federal Reserve and Donald Trump.

Brent traded below $71 a barrel, with US equity futures also reversing an earlier increase. Fed Chair Jerome Powell acknowledged the high degree of uncertainty from the US president’s policies, but said the central bank is in no hurry to cut rates.

Trump, meanwhile, said the Fed should reduce borrowing costs, splitting with policymakers weighing the economic cost of his tariff push. New Fed projections showed lower growth forecasts but higher inflation estimates. The Treasury market boosted its bets on lower rates.

Crude remains markedly below its mid-January peak, as a confluence of bearish factors pressures prices. While the escalating trade war threatens to hit energy demand as tariffs and counter levies are imposed, OPEC and its allies are set to raise output from April, contributing to weaker global balances.

“US tariff news is likely to keep oil prices volatile,” said Giovanni Staunovo, a commodity analyst at UBS Group AG. “That said, we retain our moderately constructive outlook for crude prices.”

US inventories of gasoline, meanwhile, fell last week to the lowest since the start of the year, while distillates — a category that includes diesel — also sank, allaying concerns about consumption. Crude stockpiles rose less than flagged in an industry report, while levels dropped at the Cushing, Oklahoma, hub.

Source: Yahoo Finance

Risk Warnings and Disclaimers

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Warren Takunda

Cryptocurrency

Bitcoin price has jumped by 4% in the last 24 hours to reach over $86,000 on March 20. At its intraday high, the cryptocurrency was trading for $87,470, signaling modest profit-taking among traders. Why Is Bitcoin Price Up Today?_1

BTC/USD four-hour price chart. Source: TradingView

Top catalysts that have driven Bitcoin prices higher today include:

Gains across risk assets after the Federal Reserve’s dovish signals.

Rising BTC supply among long-term holders’ addresses.

Bitcoin rises after Fed calms trade war bears

Bitcoin rose as the Federal Reserve signaled it still expects to cut interest rates twice later this year, easing investor concerns over prolonged monetary tightening.

Key takeaways from the Federal Open Market Committee’s meeting on March 19:

The Fed kept its benchmark rate on hold while acknowledging that tariff-driven inflation pressures may be “transitory.”

Chair Jerome Powell’s measured tone on recession risk, stating it was "not high," reassured risk-on investors.

The Fed trimmed its growth forecast, fueling a bond rally and reinforcing expectations of lower borrowing costs in the future. Why Is Bitcoin Price Up Today?_2

US 2-year and 10-year Treasury note yields daily chart. Source: TradingView

Lower interest rates make risk assets like Bitcoin more attractive, as they reduce the opportunity cost of holding non-yielding investments.

US President Donald Trump’s renewed pressure on the Fed to cut rates added to speculation that monetary policy may loosen further, benefiting Bitcoin.

Long-term Bitcoin holders turn to accumulation

Bitcoin’s ongoing price rise coincides with signs of accumulation among its long-term holders: entities holding BTC for more than 155 days.

Key points:

Long-term holder (LTH) spending pressure is waning, as indicated by a slowdown in the Binary Spending Indicator and a rise in LTH supply.

A greater willingness to hold rather than sell suggests a shift away from sell-side distribution. Why Is Bitcoin Price Up Today?_3

Bitcoin long-term holder spending Binary Indicator. Source: Glassnode

A brief but sharp spike in LTH distribution (the red bars in the chart below) occurred when Bitcoin dropped to four-month lows, as some investors took profits.

Bull markets typically see sell-side pressure from LTHs balanced by new demand, and this cycle has absorbed a similar volume of LTH profits as previous ones. Why Is Bitcoin Price Up Today?_4

Bitcoin long-term holder balance sent to exchanges. Source: Glassnode

“This perhaps alludes to a degree of saturation being reached among Long-term holders, where they have completed a majority of their sell-side activity within the current price range,” wrote Glassnode analysts in their latest weekly report.

Bitcoin bounces from technical support

Bitcoin price rise today comes after testing the lower trendline of its prevailing ascending channel pattern.

What to note:

Bitcoin has been trending higher inside the ascending channel since March 9.

The cryptocurrency has since tested the channel’s lower boundary thrice, the latest being on March 18. Why Is Bitcoin Price Up Today?_5

BTC/USD four-hour price chart. Source: TradingView

The first two scenarios led to 7.50% and 6.60% bounce — while the current one preceded 7.60% gains.

As of March 20, BTC/USD was facing stiff resistance around the channel’s upper boundary, aligning with the 200-4H EMA (the blue wave) near $87,830.

A decisive pullback may lead the pair initially toward the 50-4H EMA at around $83,900.

A further correction could have it test the channel’s lower boundary as support, aligning with $82,400, which served as support between March 16 and March 17.

Source: Cointelegraph

Risk Warnings and Disclaimers

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Michelle

Cryptocurrency

After the recent Federal Open Market Committee meeting, the US Federal Reserve, yesterday, announced its plan to keep its federal funds rate unchanged at 4.25%-4.5%. Every FOMC meeting influences Bitcoin prices, sometimes causing major swings. In the last 24 hours, the price of BTC has seen a rise of 3.1%. This report looks at past rate hikes, how Bitcoin reacted and what traders can expect going forward. Ready? Dive in!

How the Fed’s Rate Hike Shook Bitcoin: An Overview

In April 2022, the Fed funds interest rate was as low as 0.5%. It was in May 2022 that the US Fed decided to revisit its interest rate policy. The primary reason was that the inflation rate had reached as high as 8.6% in May 2022. In June, the inflation rate touched a peak of 9.1% - the highest in a decade.

Between May 2022 and July 2023, the US Fed consistently pushed the interest rate upwards. By July 2023, it had reached as high as 5.5%. The level remained unchanged until August 2024.

In August 2024, the inflation rate fell to 2.5%. In fact, between June 2022 and June 2023, the rate declined consistently.

It was in September 2024 that the US Fed reversed its stance on the interest rate policy. In September, the interest rate was reduced from 5.5% to 5%. In November, it was lowered to 4.75%. In December, for the third time in 2024, it was brought down to 4.5%.

Bitcoin’s Response to Recent FOMC Meetings

In the March 2024 FOMC meeting, the US Fed decided to keep the interest rate unchanged at 5.5%. Initially, the Bitcoin market reacted positively, pushing the price to a new ATH. In April 2024, the market moved sideways, trading within a range of $71K and $61K.

In the May 2024 FOMC meeting, the Fed showed no interest in making any changes. The BTC market showed small signs of recovery.

In the June 2024 FOMC meeting, even though the Fed acknowledged the moderation in inflation, they decided to keep the interest rate unchanged. At one point in June 2024, the BTC price dropped as low as $58,360.67.

In the July 2024 FOMC meeting also, the Fed refrained from making changes. The BTC market plummeted sharply after the meeting. At one point on August 5, it dropped to a low of $48,919.60.

In the September 2024 meeting, the Fed reversed its interest rate policy. It reduced the rate by 25 basis points to 5%. Within ten days of the meeting, the Bitcoin price climbed by 10%. This marked the beginning of a new bull run in the market.

In the November 2024 meeting, the Fed implemented another 25 basis point reduction. November 2024 was a fantastic month for BTC. A favourable macroeconomic and political environment, fueled by Donald Trump’s victory in the US presidential election, contributed to Bitcoin’s steep growth.

In the December 2024 meeting, the Fed reduced the interest rate to 4.5%. It was the third and final reduction implemented by the Fed in 2024. In December, the BTC price touched a new ATH of 108K.

In the January 2025 FOMC meeting, the Fed returned to its “wait and watch” policy. It kept the interest rate unchanged at 4.5%. By January 2025, the Bitcoin market lost the bullish momentum, which had helped the asset reach its ATH of $109K.

Source: CryptoSlate

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Pay growth remained high at 5.8% in the three months to January, according to official data, maintaining the pressure on the Bank of England not to cut the cost of borrowing when it reveals its interest rate decision on Thursday.

The rate of pay growth fell slightly but remained well above inflation, indicating that employers continued to offer higher pay to secure skilled workers.

The fall to 5.8%, including bonuses, was in line with the forecasts of City economists and was 3.1% higher after taking into account inflation over the quarter.

Pay growth has now been above 4% for three years, the strongest run of pay growth since the Office for National Statistics (ONS) began recording the measure in 2001.

Bank of England policymakers would have had the data to hand when they met on Wednesday to consider cutting interest rates after a rise in unemployment and almost zero economic growth over the last six months. They are expected to keep rates level at 4.5% until the next meeting in May while pay growth remains elevated.

Unemployment remained the same in January at 4.4%, though the ONS warned that its labour force survey was likely to be heavily revised in the coming months. The statistics body has struggled to compile the survey since the pandemic hit after a large drop in the number of people willing to complete its survey forms.

Suren Thiru, the economics director at accountancy body the ICAEW, said the figures suggest falling business confidence meant the UK’s jobs market had little momentum.

He said: “Elevated wage growth is a double-edged sword for the economy because, while it’ll help boost consumer spending – a key driver of economic growth – it may limit the pace of interest rate cuts by fuelling fears over rising inflation.”

He said a rise in employers’ national insurance next month “could well trigger both moderately higher unemployment and weaker pay settlements”.

Earnings growth excluding bonuses was 5.9%: it was 6.1% for the private sector and 5.3% for the public sector. The ONS said the retail and hospitality sectors experienced the largest annual regular growth rate at 6.3%, followed by the construction sector at 6.2%.

Strong pay rises in these sectors mirrored large falls in employment, especially in the retail sector. The British Retail Consortium (BRC) calculated that over the past five years the industry had suffered a 249,000 drop in the number of jobs to 2.88m.

The ONS has tracked a steady fall in vacancies since 2022 to 816,000, though the figure remains above pre-pandemic levels.

Recent business surveys have shown a slight recovery in the demand for workers over the past month.

Sectors that have suffered over the past year, including IT services and construction, showed a recovery in job adverts, according to a labour market tracker published by Recruitment and Employment Confederation.

A separate recent survey by the ManpowerGroup recruitment agency found the demand for workers had stabilised, despite concerns about falling levels of business confidence before tax rises come in at the start of next month.

Employers’ national insurance contributions are due to increase next month, harnessing £25bn for the Treasury. The national minimum wage for over-21s will rise by 6.7% to £12.21 an hour.

Economists expect inflation-busting wage rises to feed through this year into higher household spending. A BRC survey found that confidence in the economy and respondents’ own finances had improved.

Source: Theguardian

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Warren Takunda

Economic

“There is a foundation to believe in the attractiveness of Europe, especially on a relative basis,” Francesco Ceccato, Barclays Europe CEO, told Euronews' Business Editor, Angela Barnes, in an exclusive interview.

“What we've seen in the year-to-date period is clearly a compression in the US stock market, for example, and an increase in the indices that I look at for the European stock market.”

According to a recent report from Morgan Stanley, European equities have this year outperformed US stocks by the widest margin since 2000.

The MSCI Europe Index has risen over 9% since January, beating the S&P’s slide of 4.5%.

To turn to the latest Fund Manager Survey from Bank of America, released this Tuesday, the data also showed the most significant rotation from US to European equities since records began in 1999.

A net 39% of fund managers now hold an overweight position in European equities, the highest level since mid-2021. On the other hand, 23% of investors report being underweight US stocks.

Despite the recent rally, researchers from Goldman Sachs have predicted that the uptick isn't fleeting. Last week, they suggested that European equities would rise as much as 6% in the next 12 months.

A tariff war

“There is clearly a lot of concern amongst the investors…around what some of the trade disruption might do to the economy,” Ceccato said, referring to tariff threats from US President Donald Trump.

The White House noted on Tuesday that new reciprocal tariff rates would take effect on 2 April, despite suggestions that they could be delayed.

While the US is looking to mirror some trade barriers established by other nations, it has also imposed another raft of levies.

Trump has - for instance - introduced a 25% tariff on all steel and aluminium imports. That’s as well as placing a 20% tariff on incoming Chinese goods and threatening a 200% levy on EU alcohol imports.

Trade policies are likely to have “significant” impacts on the US, said Ceccato, harming growth and pushing up inflation.

Ceccato added that Europe is also set to suffer from a tariff war, although economies could see a boost from extra defence spending.

"The euro area has roughly €480 billion of goods exports to the US. Now, at the moment, the latest models that our research team have looked at are relatively mild in terms of the tariff assumption that's being made. But were there to be a 25% tariff on all of those goods, that could actually tip the eurozone into recession,” he said.

Greater defence spending

Meanwhile, Germany’s parliament has just this week approved a reform of its debt brake proposed by chancellor-in-waiting Friedrich Merz, which allows for more fiscal flexibility.

Defence spending of more than 1% of GDP will be exempted from the strict debt limit and state governments will be allowed to run annual deficits of up to 0.35% of GDP. The bill will also establish a €500 billion fund to invest in the country’s ageing infrastructure.

On the prospect of greater military spending, Europe’s defence companies are cashing in. Rheinmetall shares are up around 124.8% in the year to date, Thales stock has jumped 79.2%, while shares in Leonardo have risen 82.9%.

Savings and Investments Union

Discussing how Europe can further improve its competitiveness, Ceccato noted that the EU still needs to work on developing deeper pools of capital.

“We also need to think creatively about how we can use…the firepower that we have in some of our European institutions to pair up with private capital, that is, institutional capital that can be brought to bear to tackle some of these Herculean challenges,” he said.

Ceccato explained that if Europe wants to effectively support its industries, it cannot solely rely on retail investments made by members of the public.

Compared to EU firms, companies in the US still find it easier to access capital due to the scale of the market and flexible funding options. A more risk-averse sentiment in the EU, as well as a more fragmented financial market across diverse member states, can hamper innovation.

"This is still all about capital, capital, capital," said Ceccato.