Trump pressures "lower interest rates"...market bets on September hike

▲ Crude oil, international oil prices, interest rates, US Federal Reserve (Fed)/AI-generated image

While U.S. President Donald Trump pressured for interest rate cuts, the market's bet on interest rate hikes surged to around 70%.

According to Bitcoin.com on September 1 (local time), the probability of the Federal Reserve (Fed) raising the benchmark interest rate by 0.25 percentage points in September rose to 66.4% on CME FedWatch. The outlook for a hike, which had jumped to 57% immediately after Fed Chairman Kevin Warsh's Jackson Hole speech, has risen again. In a separate tally, the possibility of an interest rate hike before the midterm elections was found to exceed 71%.

Trump voiced the opposite. He stated that he had not discussed interest rates with Warsh and had no intention of dissuading a hike, yet he argued that “the United States should have the lowest interest rates in the world.” He reiterated his previous stance that borrowing costs should be lowered when the U.S. economy is strong. In August, Trump also demanded a prompt cut, calling the benchmark interest rate “artificially high.”

Warsh emphasized price stability. He stated that recent inflation indicators are higher than the Fed desires and that “the underlying trend cannot be seen as significantly improved.” He further stressed that “the Fed's top priority right now should be inflation.” The Fed froze benchmark interest rates in June and July, but calls for rate hikes continued in two meetings.

The market reacted immediately. The Dow Jones Industrial Average fell by 374.09 points, and the NYSE Composite Index dropped by 123.23 points. The Nasdaq Composite Index fell by 31.54 points, and the S&P 500 by approximately 25.62 points. Gold declined by 2.44% over 24 hours. Bitcoin (BTC) also fell by about 1% to $77,778.

Jim Cramer, host of CNBC's Mad Money, cited Warsh's monetary policy stance, geopolitical tensions, and rising oil prices. He stated, “I don't know how interest rates can come down when Warsh is seriously implementing policy and oil prices are rising rapidly again.” With Trump's demand for rate cuts and the market's bet on hikes directly conflicting, vigilance regarding the September Fed meeting has increased.

[Article Key Summary]

- The probability of the Fed raising interest rates by 0.25 percentage points in September rose to 66.4% on CME FedWatch, and the likelihood of a hike before the midterm elections exceeded 71% in a separate tally.

- Trump demanded lower interest rates, stating that the U.S. should have the lowest rates in the world, while Warsh emphasized price stability as the top priority.

- Growing concerns over interest rate hikes led to declines in the U.S. stock market and gold, with Bitcoin also falling to $77,778.

*Disclaimer: This article is for investment reference only, and we are not responsible for investment losses based on it. The content should be interpreted for informational purposes only.*