President Donald Trump has demanded via Twitter that the Federal Reserve FED reduce interest rates to face Black Monday.
The effects of Black Monday are still being felt worldwide, which is why countries must react. Governments are rushing to find solutions that build investor confidence once again. However, this does not seem to be enough for Donald Trump, who has criticized the sluggishness of the Federal Reserve (FED) today via Twitter.
Trump and FED
Yesterday represented one of the most important milestones since the appearance of the Coronavirus earlier this year. The abrupt fall of international financial markets is already here. This implies a blow to the United States, causing Trump’s comments today. And the cause is two simultaneous and closely related factors.
Firstly, the lack of an agreement between Saudi Arabia and Russia to decrease oil production. This phenomenon was very aggressive due to the sensitivity of the situation, considering that the reduction in demand generated by the Coronavirus already threatened to bring the price of crude oil down.
On the other hand, the ever-faster advance of the Coronavirus in the western world also was an important factor. This threatens to seriously affect the world economy. It might disrupt the global supply chain and therefore lead to a significant drop in economic activity. As expected, Trump had to react to this.
Financial Markets
All this led to the collapse of the financial markets yesterday. Therefore, this led to the rapid action of the United States Federal Reserve, which injected funds into the economy in an attempt to generate greater investor confidence. This did not seem to be enough for the President of the United States, Donald Trump, who tweeted earlier today:
“Our pathetic, slow-moving Federal Reserve, headed by Jay Powell, who raised rates too fast and lowered too late, should get our Fed Rate down to the levels of our competitor nations. They now have as much as a two-point advantage, with even bigger currency help. Also, stimulate!”
Demands
President Trump demands that the FED, in the face of the havoc caused by the Coronavirus, cut interest rates in the country, generating a stimulus to investment and consumption. This should, in turn, drive economic growth at a time of great uncertainty. It remains to be seen whether the Federal Reserve will heed Trump’s demands, or maintain its current stance.
