Donald Trump has been at war with the Federal Reserve since his first term, with the board never seeming to act quickly enough for the president's liking.
Trump's second term has started much in the same way, as the president has been citing the failure of the Fed to cut an astronomically high federal interest rate even since before he took office in January.
The president finally got his way on Wednesday, which was shocking, actually, considering the insults he has thrown in the direction of Federal Reserve chair Powell and the continued presence of Federal Reserve Governor Lisa Cook, whom Trump recently attempted to fire.
Earlier this summer, Trump was calling for Powell to resign from his position.
When news reports emerged about a possible investigation into Powell, Trump posted to Truth Social, "'Too Late' should resign immediately!!!"
It was not the first time that Powell would be asked by the president to resign, and it surely would not be the last.
The problem for Trump, however, was that his bullying did not phase Powell. In fact, Powell vowed to fight a potential termination in court if the president decided to go that route.
With the board scheduled to meet, Trump was asked about his potential nominees to replace Powell as well as his choices to fill other board positions. Trump responded with regard to the Fed chair, “I don’t think he can help with cutting."
“It’s perfect for cutting. And the thing that he’s hurting most is housing for people, but because we’re doing well and everything, energy is way down, groceries are down, everything, almost everything, is way down."
Trump continued, “But housing, because of the Fed, is not what it should be, but it’s not what it is.”
We are finally starting to see some impact to the economy from Trump's tariffs, as companies are now starting to raise prices to offset their costs, likely the reason inflation rose by 0.2% last month. Trump needed today's rate cut because if he did not get it, there is no telling where the next report could go.
On Wednesday, the Fed finally gave Trump what he wanted, just not as much as he would have hoped. The Fed cut interest rates by 25 basis points, but I know Trump was hoping for at least a 50-point cut.
In explaining the decision, Powell stated, "Overall, the marked slowing in both the supply of and demand for workers is unusual. In this less dynamic and somewhat softer labor market, the downside risks to employment appear to have risen."
Powell added, "Inflation has eased significantly from its highs in mid-2022, but remains somewhat elevated relative to our 2% longer-run goal."
I doubt the 25 points will be enough to produce the growth in home lending that Trump wants to see, but it should offer a small kickstart to an economy that has been treading water for some time now.
