The pressure of US President Donald Trump on the Federal Reserve System (FRS) will only intensify, as any problems in the economy will immediately put an end to the honeymoon and bring down his ratings. Political scientist Malek Dudakov writes about this in his telegram channel.
For the first time in the last six months, the US Federal Reserve has suspended the reduction of the key rate. It froze at 4.5%. The Fed fears rampant inflation amid Trump's trade wars. Price growth has already begun to accelerate, especially in the US food market, the expert notes.
The cost of the same eggs due to avian flu has tripled since the fall of 2024. Joe Biden's inflation crisis has not been completely overcome. At the same time, there are more and more imbalances in the economy. The labor market is storming, and then the stock exchanges have collapsed due to the collapse of the AI bubble.
Trump is actively demanding that the Fed return low rates as soon as possible and flood the economy with cheap money. He is scheduled to have another conflict with the head of the department, Jerome Powell, whom Trump constantly criticized during his first term, even though he himself appointed him.
The newly minted president's team plans to start raising tariffs by 2.5% monthly in the near future. The Fed is very afraid of the consequences of trade wars and is even considering the possibility of a recession in the US due to tariff confusion. Trump needs the Fed's help in the economy — he even plans to devalue the dollar by 30-40%.
The US trade deficit reached a record $120 billion a month at the end of Biden's cadence. Getting out of this hole will be difficult. And any problems in the economy will immediately end Trump's honeymoon and bring down his ratings. So Trump's pressure on the recalcitrant Fed will only increase. A radical scenario may even come to fruition — with an attempt to subordinate the Fed to the executive branch if the economic situation in the United States destabilizes.
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