President Donald Trump says he'll 'demand that interest rates drop immediately'

President Donald Trump announced Thursday that he will call for lower U.S. interest rates, intensifying pressure on the Federal Reserve despite its traditional political independence.

During a virtual address at the World Economic Forum in Davos, Switzerland, Trump demanded a reduction in interest rates while also calling for lower oil prices from OPEC, the oil-producing nations' group that includes Saudi Arabia.

Trump suggested that lower oil prices would allow the Fed to ease its inflation-fighting efforts and reduce rates. "I’m going to ask Saudi Arabia and OPEC to bring down the cost of oil," Trump said, adding, "With oil prices going down, I’ll demand that interest rates drop immediately."

While the U.S. is not a member of OPEC, nor does the president influence its decisions, Trump has consistently sought to pressure the group in the past.

Trump’s Push for Interest Rate Control

Although the Federal Reserve operates independently, Trump has a history of voicing opinions about its monetary policy, often advocating for low interest rates. On the campaign trail in August, Trump stated that U.S. presidents should have a role in setting rates, a view that diverges from the norm of central bank independence.

Fed Chair Jerome Powell has publicly resisted political interference. When asked in November whether he would resign if Trump demanded it, Powell firmly responded, "No," and clarified that the president is not legally permitted to fire or demote him.

Economists, both liberal and conservative, have criticized the idea of a president influencing monetary policy. They cite historical examples, such as President Richard Nixon pressuring Fed Chair Arthur Burns to cut rates before the 1972 election, which contributed to rampant inflation in the 1970s and 1980s.

"Allowing the president, any president, to help set monetary policy would eventually wreck the U.S. economy," said Mark Zandi, chief economist at Moody’s Analytics.

Current Interest Rate Trends

Trump’s comments come as the Fed has gradually reduced interest rates over recent months. Between October and December 2024, the central bank cut rates by a full percentage point, providing relief for borrowers after a prolonged period of high rates.

However, the Fed has signaled that rate cuts may slow in 2025. Policymakers have warned that inflation could remain more persistent than expected, requiring caution.

The Fed is set to announce its next decision on rates next week, with market expectations pointing to the current rate range of 4.25% to 4.5% being maintained.

Global Impact

Trump also called for worldwide interest rate reductions, stating, "They should drop all over the world. They should follow us."

As the Fed continues to navigate economic uncertainty, Trump’s remarks reflect his ongoing push to influence both domestic and global financial policy.