July Job Market Slows Significantly, Trump: If Powell Doesn't Cut Rates, the Fed Should "Take Over" Interest Rate Policy

President of the United States, Trump, posted on Truth Social on Friday (August 1) accusing Powell of being a "stubborn fool." He stated that if Federal Reserve Chair Powell continues to refuse to cut rates, the Federal Reserve Committee should "take over" interest rate policy, escalating the conflict between the two again.

Trump again demanded that Powell significantly lower interest rates in his post, "If he continues to refuse, the Federal Reserve should take over (interest rate policy), doing what everyone knows must be done!"

The Federal Reserve's interest rate policy is decided by voting among members of the Federal Open Market Committee, and the seven Fed governors are also committee members. It is unclear what Trump meant by "taking over." The White House did not immediately respond to media inquiries about Trump's latest remarks.

The Federal Reserve maintained interest rates unchanged in its regular meeting on Wednesday (July 30), but revised down its outlook for the U.S. economy, signaling that the central bank is approaching a rate cut.

Notably, although the Fed ultimately voted to keep interest rates unchanged, two of the seven governors voted in favor of a rate cut, which is the first time since 1993.

According to reports, the two governors who supported the rate cut, Bowman and Waller, were both appointed by Trump, and Waller is also one of the front-runners to succeed as Federal Reserve Chair.

U.S. July Job Market Slows Significantly, Possibly Increasing Probability of Earlier Rate Cuts

On the same Friday, the U.S. government released the latest data showing that the number of nonfarm payrolls added in July reached 73,000, below market expectations; and the data for the previous two months was also revised down by nearly 260,000, with an average of only 35,000 new jobs per month over the three months from May to July, the worst three months since the pandemic.

Additionally, the U.S. unemployment rate in July reached 4.2%, up 0.1 percentage points from the previous month, indicating that more Americans are finding it harder to find jobs, and wage growth has stalled, posing downward risks to consumption and business spending.

Bloomberg Economics pointed out that the main takeaway from the latest employment report is that the decline in labor demand seems to be faster than the supply of labor. Powell previously said the labor market was not strong enough, and he is expected to revise his view based on the latest data.

Bloomberg Economics maintains its prediction that the Fed will cut rates in December, but notes that the probability of Powell acting earlier is increasing.

Original: https://www.toutiao.com/article/1839275657885696/

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