Trump Renews Fed Rate-Cut Pressure After Surprise 3% US GDP Jump

U.S. President Donald Trump again urged the Federal Reserve to cut interest rates on Wednesday in a post on Truth Social after the second-quarter gross domestic product numbers came in better than expected.

““Too Late” MUST NOW LOWER THE RATE. No Inflation! Let people buy, and refinance, their homes!” he wrote, referencing Fed Chair Jerome Powell. Trump has repeatedly asked the Fed to lower interest rates by three percentage points, stating that it was costing the country more than $1 trillion per year. 
 

According to preliminary government data released on Wednesday, inflation-adjusted GDP, or Real GDP, which measures the value of goods and services produced in the U.S., increased an annualized 3% after shrinking 0.5% in the previous quarter. According to data from Bloomberg, economists were expecting GDP to rise just 2.4%. 

"Compared to the first quarter, the upturn in real GDP in the second quarter primarily reflected a downturn in imports and an acceleration in consumer spending that were partly offset by a downturn in investment," the Bureau of Economic Analysis said.

Consumer spending—which accounts for two-thirds of GDP—advanced 1.4%. Business investment growth cooled.

The data on second-quarter economic activity in the U.S. comes as Federal Reserve policymakers wrap up their two-day meeting this afternoon. Data from the CME FedWatch tool indicates a 96.9% probability that the central bank will maintain interest rates at the current 4.25% to 4.5% range in July.

U.S. equity markets were mixed in pre-market trade ahead of the Federal Reserve’s decision on interest rates. The SPDR S&P 500 ETF (SPY) edged 0.7% higher, while the SPDR Dow Jones Industrial Average ETF (DIA) slipped 0.01%. The Invesco QQQ Series 1 Trust (QQQ) was up 0.13%. 

On Stocktwits, retail sentiment around SPY jumped to ‘extremely bullish’ from ‘bullish’ over the past day. Meanwhile, retail sentiment around DIA remained in the ‘bullish’ zone.

Trump’s post against Powell is the latest in a series of public criticisms made by the President against the Fed Chair. While the Federal Reserve has maintained its wait-and-watch approach on interest rates, President Trump has demonstrated his growing impatience with the central bank’s approach.

Read also: Trump Announces 25% Tariff On India, ‘Plus A Penalty’ For Ties With Russia

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