tl;dr
US President Donald Trump has increased pressure on Federal Reserve Chair Jerome Powell to cut interest rates aggressively. Trump criticized the Fed's $2.5 billion renovation costs, claiming they exceeded $3 billion, but Powell disputed this figure. After their meeting, Trump suggested Powell might ...
US President Donald Trump has ramped up pressure on Fed Chair Jerome Powell to aggressively cut interest rates. Recently, Trump toured the Federal Reserve’s $2.5 billion renovation project, though he claimed costs had soared above $3 billion. The Fed defended the expenses, citing the need to update century-old infrastructure and remove hazardous materials. Powell disputed Trump’s higher cost figure, explaining it included renovations completed five years ago.
Following their meeting, Trump suggested Powell might be willing to lower rates, citing cooled inflation and easing policies from other central banks. Despite harsh criticism, Trump asserted he would not dismiss Powell as long as rate cuts occur. Powell, speaking at the Sintra conference earlier this month, emphasized data-driven decisions on interest rates without committing to a July cut, which is now unlikely as the month ends.
Within the Fed, dissent has surfaced with Governors Waller and Bowman openly advocating for an immediate rate cut, marking the first dual dissent in three decades. This internal division highlights contrasting views on monetary policy amid economic uncertainty.
For the crypto market, lower interest rates generally increase risk appetite, reducing discount rates for digital assets and driving up valuations. Political pressure from Trump adds complexity, raising questions about the Fed’s independence and market stability. Conversely, hesitation to cut rates might suggest tougher conditions ahead for crypto.
Lower interest rates often weaken the US dollar, as investors seek higher returns outside USD assets, reducing foreign interest in dollar-denominated bonds. A weaker dollar tends to benefit Bitcoin and other cryptocurrencies, which are frequently seen as digital gold—safe havens during traditional currency weakness. Furthermore, when the dollar weakens, other local currencies gain purchasing power, enabling more global investors to enter the crypto market.