President Donald Trump has been urging the U.S. Federal Reserve to cut interest rates for months. Now, Trump might finally get what he wants. The Federal Reserve has warned that the economy is showing signs of slowing and, in an effort to bolster growth, many believe the Fed will opt to cut rates.
Up until recently, the Fed has largely had a positive view regarding the economy. As a result, the Fed has consistently but slowly been raising interest rates. This should, in theory, temper inflation and also economic growth. However, with the economy slowing, a rate cut could help spur economic expansion.
Still, the central bank has declined to cut interest rates, for now. Sentiments are changing, however. Back in March, none of the 17 Fed leaders anticipated a rate cut this year. Now, 7 out of 17 of the Fed’s leaders are expecting two rate decreases by the end of the year.
President Trump has been adamant that the Fed should cut rates. Fed Chair Jerome H. Powell has repeatedly claimed that he would not cave to political pressure from the White House or anyone else. However, with the economy potentially slowing, Powell will likely try to stimulate growth. Trump’s trade wars and other issues have made investors and businesses jittery.
While the unemployment rate and inflation remain low, many analysts have been raising their outlook regarding the possibility of a recession. At the beginning of 2018, JPMorgan Chase gave only a 20-percent risk of the U.S. entering a recession. Now, the bank says there’s a 50-percent risk within the next year.
Meanwhile, the manufacturing PMI dropped from 52.6 in April to 50.5 in May, suggesting that the manufacturing industry is in decline.
