Trump threatens to halt trade with deficit countries if Fed does not cut rates

US President Donald Trump has ratcheted up the stakes in his pressure on the Federal Reserve over its monetary policy, threatening to end trade with countries where the United States has a trade deficit unless the Federal Reserve cuts interest rates.

“LOWER THE RATE OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT,” Trump said Friday in a post on Truth Social. He argued that high interest rates put the United States at an unfair disadvantage and called for the country to have the lowest borrowing costs in the world.

Trump’s comments followed the US Bureau of Labour Statistics reported stronger-than-expected job growth in August. The report boosted market expectations that the Federal Reserve could hike interest rates instead of cut them at its September meeting.

The president has repeatedly criticized the Federal Reserve for keeping borrowing costs too high, and has said rates should be lowered to boost economic growth.

Halting trade with deficit countries would be a major escalation of Trump’s trade policy and could disrupt commercial ties with US trade partners.

The Federal Reserve, an independent agency from the White House, sets interest rates based on its assessment of inflation, employment and the overall state of the economy. The latest demand from Trump thus adds more political pressure on the central bank as it considers its next policy move.