United States President Donald Trump indicated his preference for lower interest rates during his speech at the Asia-Pacific Economic Cooperation (APEC) Summit, saying, “When we announce good news, we want the stock market to go up.” The comment is widely viewed as a subtle nudge to the U.S. Federal Reserve to deliver a 25 basis point interest rate cut during its upcoming policy meeting on October 29.
Market Expectations and Performance
The S&P 500 index has risen over 5% in the past two-and-a-half weeks, buoyed by expectations that the Federal Reserve will opt for a rate cut to stimulate economic activity and inject additional liquidity into the markets.
Investors anticipate a 0.25 percentage point reduction in the benchmark rate, bringing the target range closer to 3.75%–4.00%, marking the second consecutive rate cut this year.
The optimism stems from softer-than-expected inflation data, which has provided room for policymakers to adopt a more accommodative stance.
Policy Divide at the Federal Reserve
Despite mounting pressure from the White House, Federal Reserve officials remain divided.
On one hand, a rising risk in the U.S. job market—intensified by ongoing layoffs—has strengthened the case for a rate cut to support employment and economic growth.
However, core inflation, which has remained steady at 3% for the last three months, is still 100 basis points above the Fed’s 2% target, limiting the room for further easing.
This internal policy divide underscores the Fed’s challenge of balancing inflation management with economic support, especially amid mixed signals from the labor and manufacturing sectors.
Trump’s Economic Strategy
President Trump’s call for lower rates is part of a broader push to attract investments into the U.S. manufacturing and industrial sectors, reinforcing his “America First” economic agenda.
However, the administration’s tariff policies, while aimed at protecting domestic industries, have also contributed to higher input costs for American businesses, posing inflationary risks that could deter further monetary easing.
Outlook
As markets await the Fed’s decision, all eyes remain on Fed Chair Jerome Powell, who is expected to provide guidance on the trajectory of monetary policy for the remainder of the year. The decision will have significant implications for global capital flows, emerging market currencies, and commodity prices.
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