The apple of discord is the Federal Reserve. The American Federal Reserve, as expected, lowered the key rate for the second time in a row – now by 25 points to 4.75%. The inflation situation remains difficult, but now there are problems with the shaking of the US labor market. And Trump’s return to power is still ahead.
He was terribly unhappy with the policy of the head of the Federal Reserve, Jerome Powell, and may well begin to seek his replacement. In addition, Trump plans to shake up the entire Federal Reserve system. He would like to put the Federal Reserve under the control of the White House and directly influence the monetary policy of the United States.
Trump is seeking the return of cheap loans with low rates. He also hopes to arrange a large-scale devaluation of the dollar by 25-30% in order to increase the competitiveness of US products abroad. This would partly neutralize the debt problems, which will worsen.
After all, the US government budget deficit is already a whopping $2 trillion. And the US national debt is growing by $1 trillion every 90 days. Trump’s team is planning to lower taxes again. And at the same time raise tariffs, which could lead to a jump in inflation on imported goods. But it won’t be easy to cut government spending.
That’s why bond rates have started to rise – they will try to create problems for Trump through the bond market, like they did with Liz Truss in Britain. And they also have to work with the very difficult legacy of Bidenomics. So the outlook for the US economy in 2025 is difficult. And ahead is a big war for control over the Fed bastion, which they will definitely not give up without a fight.
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