Trump Pushes Fed To Slash Interest Rates To 1%, Sparking Inflation Fears
"We need a 1% rate. The Fed is killing growth," Trump said during a campaign rally in Michigan on Monday.
The current federal funds rate sits at 5.25–5.50%, held steady by the Fed to combat inflation and avoid overheating the economy. A shift to 1% would mark the most dramatic monetary loosening since the COVID-19 crisis. Economists Caution Against Panic Move
As reported by Reuters, Trump's proposal was met with skepticism from leading economists.
"Slashing rates that aggressively would be seen as a panic move," said Diane Swonk, Chief Economist at KPMG. "It would signal the Fed sees a severe downturn ahead, even if that's not the case."
According to Yahoo Finance, business leaders are already warning that Trump's other proposed economic measures—particularly new tariffs—could fuel inflation, even if interest rates are slashed.
Economists note that inflationary pressures remain persistent, especially in housing and energy. Lowering rates too quickly could send the wrong signal to markets and drive volatility in the bond market and U.S. dollar. Debt Pressure and Political Calculations
The push comes as federal debt servicing costs approach historic levels. As noted by Reuters, a 1% rate could ease short-term interest payments on the national debt—but might spark long-term instability.
Across the Atlantic, concerns are growing. According to The Guardian, EU Trade Commissioner Maroš Šefčovič warned that Trump's broader policy package, including proposed tariffs of up to 30%, could "eliminate" transatlantic trade as we know it. Fed Independence in the Spotlight
The Federal Reserve, led by Chair Jerome Powell, has repeatedly stated its independence from political influence. The next FOMC policy meeting is scheduled for July 30–31, with most analysts expecting the Fed to hold rates steady.
But the pressure is mounting. As reported by Fortune, market participants are increasingly watching for signs of political sway over Fed decisions as the 2024–25 campaign heats up.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Int'l Business Times
38 minutes ago
- Int'l Business Times
Texas Airline Contracted to Deport Migrants By Trump Admin Slashes Flights Amid Financial Struggles
A Texas-based airline that was contracted by the Trump administration to deport migrants has been forced to cut back flights due to financial struggles, months after activists called for a boycott of the company. Avelo Airlines, based in Houston, announced it would be cutting back their operation at Hollywood Burbank Airport in Burbank, California, to just one plane until December 2, when they would close the base entirely, Reuters reported. The company explained the reason for the decision as that it believed the location "will not deliver adequate financial returns in a highly competitive backdrop." Avelo Airlines denied that their conclusion was reached without influence from boycotts or the Trump administration contract. Back in April, Avelo Airlines agreed to a "charter program" with the Department of Homeland Security (DHS) to offer both domestic and international flights for the Trump administration's deportation efforts, as reported at the time by Houston Public Media . Andrew Levy, the airline's founder and CEO, said in a statement that while they understood that the flights, which began with the airline May 12, are "a sensitive and complicated topic," the agreement with DHS offered the company "stability" and security for their employees. After news of the airline's partnership went public, the company faced immediate backlash from critics of the Trump administration and advocates for migrants. The New Haven Immigrants Coalition, a Connecticut-based network immigrants' rights organizations, started a petition that has since garnered nearly 40,000 signatures pledging to boycott the airline unless they ended their contract with the Trump administration. The Association of Flight Attendants-CWA, a flight attendants union with members from Avelo Airlines, issued a statement obtained by the New York Times in May warning that having "an entire flight of people handcuffed and shackled" could "impede" their ability to adequately do their jobs, and presents higher risks in case of an emergency. Homegrown protests have also simply featured protestors organizing outside of airports the airline operates out of, with planned protests continuing into the future. Originally published on Latin Times
DW
an hour ago
- DW
Ukraine updates: EU fails to approve new Russia sanctions – DW – 07/15/2025
EU foreign affairs chief Kaja Kallas said the 27-member bloc did not come to an agreement on an 18th round of sanctions against Russia. Member state Slovakia has been holding up the sanctions package. DW has more. European Union foreign ministers gathered in Brussels for a summit that discussed the bloc's support for Ukraine and tougher sanctions on Russia. At the end of the working day on Tuesday, EU foreign affairs chief Kaja Kallas said the 27-member bloc failed to approve an 18th sanctions package against Russia, as Russia's assault on Ukraine continues. Slovakia has been holding up the package, but Kallas said an agreement could still be reached tomorrow. Meanwhile, Trump reportedly asked Ukrainian President Volodymyr Zelenskyy in a July 4 call if Ukraine's forces could potentially strike the Russian cities of Moscow or St. Petersburg. The White House has pushed back on media reporting on the call, saying it is being taken out of context. The EU has failed to approve a new round of sanctions of Russia, EU foreign affairs chief Kaja Kallas said after a meeting of foreign ministers in Brussels. Kallas said she was "really sad" that there wasn't an agreement today. She said she was still "optimistic," however, that had a deal would be reached tomorrow. In order to adopt the sanctions, the 27 EU members states would have to agree on adopting the punitive measures against Moscow. Slovakia has been reportedly holding up the sanctions due to concerns over a EU proposal to end imports of Russian gas by January 1, 2028. US President Donald Trump asked Ukrainian President Volodymyr Zelenskyy if Ukraine's military could potentially strike the Russian cities of Moscow or St. Petersburg, according to reports from the and . "Volodymyr, can you hit Moscow?... Can you hit St. Petersburg too?" Trump said in a July 4 call with Zelenskyy, the FT reported, citing several sources. "Absolutely. We can if you give us the weapons," Zelenskyy replied. The also reported on the call, citing a source. The reported that the call between Zelenskyy and Trump conveyed "Trump's determination to squeeze Putin." The White House has disputed FT's framing of the Trump-Zelenskyy call. White House Press Secretary Karoline Leavitt claimed the FT is "notorious for taking words wildly out of context." "President Trump was merely asking a question, not encouraging further killing," Leavitt told the . "He is working tirelessy to stop the killing and end this war." To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video Trump has grown tired with Russian President Vladimir Putin as the Kremlin-ordered invasion of Ukraine continues. During his reelection campaign in 2024, Trump ran on the promise to end the war in Ukraine. Trump announced on Monday that the US will send Patriot missiles to Ukraine to defend itself, with the weapons being paid for by the European Union. The US president on Monday vowed 'very very severe' tariffs against Russia if a Ukraine truce deal is not achieved within 50 days. US President Donald Trump has threatened Vladimir Putin's Russia with tariffs unless it agrees to a peace deal with Ukraine. This has led many to wonder if this sudden turnaround signals the end of the so-called "bromance" between the two leaders. Analyst Boris Vormann tells us that it looks like a major shift, even though Donald Trump has never articulated a foreign policy vision. To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video Ukrainian President Volodymyr Zelenskyy has delivered a eulogy to his country and its people to mark Ukraine's Day of Statehood as it continues to face the full-scale Russian invasion launched in 2022. Zelenskyy spoke of the bond between the many generations that had lived in the country. "This day is about connection," he said. "About every stage of our statehood and about the bond that unites dozens of generations: those who lived in this land a thousand years ago and those who live here today." "A bridge through time, standing on three unshakable pillars: Ukrainians were here, Ukrainians are here, Ukrainians will be here," he added. He went on to say that Ukrainians were motivated to keep going not by praise from the country's allies about how brave and resilient they are but by the desire for self-preservation. "[...] Ukrainians are holding on not for that, not for the loud accolades directed at us. We are simply people defending our home. And we cannot do otherwise — because we do not want otherwise. We do not want Russia here. That is the whole truth," he said. His address also expressed gratitude to the "millions of Ukrainians" involved in defending the country. "It is a great cause, carried by you. The heroes at the front. Those holding the line. Those intercepting missiles and 'Shaheds' every night. Those extinguishing fires, those clearing rubble. And every citizen who has endured throughout this difficult time," he said. "Happy Statehood Day, fellow citizens!" Russian forces have taken control of two villages in the eastern Ukrainian region of Donetsk, much of which is controlled by Russian-backed separatists. In posts on Telegram, the Russian Defense Ministry said its troops had taken Voskresenka and Petrivka. The ministry said Ukraine had lost "up to 125 troops" during the offensive to "liberate" Petrovka. In Voskresenka, up to 185 Ukrainian troops were lost, the ministry said. The battlefield reports could not be independently verified. More now on the Ukrainian drone attacks overnight, which Russian authorities say left 18 people injured. Russia says it shot down 55 Ukrainian drones over five regions in the country's south and southwestern regions. The falling debris damaged homes and commercial buildings in Voronezh, where 16 people were injured. "Sixteen people, including a teenager, were hurt as a result of the attack," Voronezh regional Governor Alexander Gusev said on Telegram. Gusev said most of the injuries were minor, involving cuts and shrapnel wounds. "But there are also injuries of a different nature and serious cases," he added. "One man is in a coma, another has a lung injury." Unverified video shared by a Telegram channel with ties to Russia's security services showed an airborne object smashing into a building on a residential street in Voronezh, the regional capital city. The crash ignited a large fireball. Voronezh's mayor Sergei Petrin said a kindergarten was damaged. In the neighboring region of Lipetsk, a drone crashed into an industrial area of the city of Yelets, leaving one person injured, Lipetsk governor Igor Artamonov said on Telegram. In Bryansk, a region which borders Ukraine and Belarus, one woman was injured in a drone attack on Sluchevsk village, according to Bryansk governor Alexander Bogomaz. Russia has said it needs time to respond to US President Donald Trump's 50-day deadline to end the war in Ukraine or face more sanctions. During the remarks on Monday, Trump also unveiled plans to provide Kyiv with more weapons and impose "very severe" tariffs on Russia's trading partners. Speaking to reporters in Moscow, Kremlin spokesman Dmitry Peskov said Trump's statement is "very serious." "We certainly need time to analyse what was said in Washington." Trump's sanctions and tariffs threat marks a significant shift in approach towards Russia and its invasion of Ukraine, as the White House has grown increasingly frustrated with Putin and the Kremlin over the lack of progress in peace talks. Peskov insisted that Russia, which has rejected previous US ceasefire proposals, is willing to negotiate. Russia is "waiting for proposals from the Ukrainian side on the timing of the third round of direct Russian-Ukrainian negotiations," Peskov said. Russia and Ukraine have held two rounds of direct talks in recent months, but those meetings in Turkey have failed to yield a peace deal. Ukraine has accused Russia of making unrealistic demands, including abandoning its ambitions to join NATO and agreeing to giving up territory in eastern Ukraine that has been occupied by Russian forces for years. The Kremlin spokesman also said Trump's remarks on Monday would likely encourage Kyiv and hinder attempts to bring about a ceasefire. "It seems that such a decision made in Washington and in NATO countries and directly in Brussels will be perceived by Kyiv not as a signal for peace but for the continuation of the war," he said. Dutch Foreign Minister Caspar Veldkamp has also welcomed Donald Trump's announcement that the US will provide NATO countries with weapons for Ukraine. "We need to ramp up pressure on Russia," Veldkamp said. That's the "only way forward," he said, although he did say that Trump's 50-day deadline is "rather long." Speaking to reporters in Brussels, Veldkamp said, "We will look into what we can do also in relation to Mr. Trump's announcements and take it from there," adding that "we're looking into that with a positive inclination." Veldkamp pointed out that the Netherlands has already provided significant military support to Kyiv. He highlighted Patriot missile systems, missile batteries, F-16 fighter planes, portable missiles known as MANPADS, as well as drone cooperation. Asked by DW's Finlay Duncan, reporting from Brussels, about whether it appears that the Trump administration's views are aligning closer with those of Europe, Veldkamp said he is "very glad there's convergence" between Washington and Brussels. He said he "appreciates" that the US seems to finally understand that "Putin is dragging his feet" when it comes to earnestly working towards a ceasefire. Veldkamp also said he was pleased to see the bipartisan support in the US for a sanctions package that has the support of 87 out of 100 senators. "It's very important that the US is on the move and that we're on the move together as EU," he said, adding that he hopes the bloc will approve the 18th sanctions package "sooner rather than later." Latvian deputy Foreign Minister Artjoms Ursulskis has said Riga is confident any remaining issues blocking the approval of an 18th round of sanctions on Russia will be dealt with. Ursulskis, is attending the Brussels meeting instead of Foreign Minister Baiba Braze, who is visiting the US this week. Slovakia has reportedly been holding up the passage of the European Commission's June proposal amid concerns over sanctions on Russian oil. But Ursulskis said ministers would "iron out" those "small details on economic impacts." He also said the focus on the next round of sanctions should be Russia's so-called shadow fleet. To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video Moscow has used a number of opaquely owned and often non-insured ships to sell its oil while circumventing Western sanctions imposed in response to Moscow's invasion of Ukraine, which began in February 2022. "It's not just about sanctioning ships, but companies helping to circumvent sanctions," Ursulskis said, which help "bring in a lot of money for the Russian economy." He said the 18th package of sanctions, once approved, would be "much bigger in its direct impact." "If we shrink Russia's economy, it will be less able to finance war," Ursulskis said. Lithuanian Foreign Minister Kestutis Budrys has welcomed Donald Trump's shifting stance towards Russia, saying "there is still a dance for two with the US." On Monday, Trump announced he would be imposing tariffs and sanctions on Russia and its trading partners unless a ceasefire in Ukraine is reached within 50 days. Budrys said the EU needs "to sync with the Americans and their timeline," calling Trump's deadline a "signal for Europe to prepare itself" in case the sanctions and tariffs do take effect. He pointed out that there are still EU member states that rely on oil from Russia. While the ministers are hoping to agree on a proposed 18th round of sanctions against Russia's energy and financial sectors, Budrys said the bloc should already "start preparing a 19th package." Despite the fact that Russian President Vladimir Putin has yet to change his approach to the war, Budrys insisted that the sanctions "are effective." "Putin has to react when sanctions packages come along," the Lithuanian minister said, adding that "they have secondary effects" and are a factor "Putin listens to." Denmark's Foreign Minister Lars Lokke Rasmussen, speaking to reporters upon his arrival at the European Council headquarters in Brussels, has said his country is ready to purchase US weapons for Ukraine. His remarks come after US President Donald Trump said Monday that the US would sell weapons, including Patriot missiles, to NATO countries, who would then provide them to Kyiv. "I am proud to say we're the biggest supporter of Ukraine per capita, so of course we're willing to do that," Rasmussen said, adding that "it goes hand in hand with the Danish Model." The Danish Model is a mechanism to provide direct support for Ukraine's defense industry Ukraine says the mechanism will provide a total of €1.3 billion ($1.5 billion) in 2025, some of which will be sourced from profits generated by seized Russian assets. Since Russia launched its full-scale invasion of Ukraine in February 2022, Denmark has provided approximately €9 billion in military support and around €867 million in civilian contribution, according to Denmark's foreign ministry. Rasmussen clarified that while Denmark does not have any of its own Patriot missiles, his government should "lean into that" and "provide the money" to purchase the highly advanced missile defense systems. "We must work out the details," Rasmussen explained. But, he added, it is "important we have American readiness to deliver these weapons." The Danish minister also said Trump's new messaging on Russia and Ukraine is "very, very important in terms of accepting providing weapons, but also the sanctions scheme." Read more about Patriot missiles and why they are key to helping Ukraine. US President Donald Trump has said he is "not done" with his Russian counterpart Vladimir Putin. The remarks, made during an interview with the BBC that was published on Tuesday, came hours after he had said he was "very unhappy" with Russia during a meeting with NATO chief Mark Rutte. Since returning to the White House in January, Trump, who had previously pledged to end the war in Ukraine in a day, has tried to bring about peace talks and a ceasefire. But his attempts have fallen on deaf ears in Moscow, with Russia escalating its air strikes on Ukraine last week after Trump and Putin had spoken on the phone. During the interview with the BBC, Trump was asked if he was done with the Russian leader. "I'm disappointed in him, but I'm not done with him. But I'm disappointed in him," Trump said. Asked how he would convince Putin to "stop the bloodshed," Trump said "We're working on it." "We'll have a great conversation. I'll say: 'That's good, I'll think we're close to getting it done,' and then he'll knock down a building in Kyiv," the US president said. Amid his growing frustration over the lack of progress with peace talks, Trump on Monday said he was sending new weapons for Ukraine and threatened tariffs and sanctions on Russia and any countries that trade with it unless Moscow agrees to a peace deal within 50 days. The assertive posture is a major policy shift from Trump, who has previously suggested that Ukraine was responsible for starting the war, echoing Russia's narrative. He also tried to walk back pro-Ukraine policies favored by Trump's predecessor Joe Biden, including supporting Kyiv's membership in NATO and insisting that Russia withdraw its forces from Ukrainian territory. To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video The European Union's foreign policy chief Kaja Kallas said Tuesday that the bloc's members are close to agreeing on a new round of sanctions against Russia. Foreign ministers from the EU's 27 member states are meeting in Brussels on Tuesday to discuss the bloc's support for Ukraine, among other issues. The European Commission in June proposed the 18th package of sanctions in response to Russia's invasion of Ukraine and Russian President Vladimir Putin's refusal to agree to a ceasefire. The sanctions target Moscow's energy exports as well as its banking sector and military industry. The sanctions proposal includes a price cap on Russian oil of 15% below the average market price, as well as bans on transactions with Russia's Nord Stream gas pipelines. "We hope to reach a political agreement on the 18th sanctions package. We are very, very close. I hope it comes today," Kallas said before the meeting. One member state — reported to be Slovakia — has yet to agree to the sanctions package over concerns about the price cap on Russian oil. When asked about the price cap, Kallas said "it's alive." "We have made proposals, but it is a question of whether we can overcome the veto of one member state or not. But we are trying to work on that," the former Estonian prime minister said. Ukrainian Foreign Minister Andrii Sybiha is also due to take part in Tuesday's talks. Sybiha plans to join the meeting by video-link. Russia's Foreign Minister Sergey Lavrov met with Chinese President Xi Jinping on Tuesday. Lavrov, who visited Russia's ally North Korea last week, is in China to attend a meeting of foreign ministers of the Shanghai Cooperation Organization (SCO). "Lavrov conveyed to the Chinese leader a friendly greeting and best wishes from the President of the Russian Federation Vladimir Putin," the Russian ministry said in a statement. "The two sides discussed a number of issues concerning bilateral political contacts ... including preparations for the Russian President's upcoming visit to the People's Republic of China." The Russian president is due to travel to China for a SCO leaders' summit in September. Since it launched its full-scale invasion of Ukraine in February 2022 and Ukraine's Western allies imposed a range of sanctions against Russia, Moscow has increasingly relied on support from China and North Korea. An overnight Ukrainian drone attack on the Russian southwestern regions of Lipetsk and Voronezh has left several people injured and damaged homes and other buildings, Russian authorities said Tuesday. Russia's Defense Ministry said on Telegram that a total of 55 Ukrainian drones were downed overnight over five Russian regions, as well as the Black Sea. Regional governor Governor Alexander Gusev 12 drones were destroyed over the Voronezh border region, where "several people sustained minor injuries due to debris from a downed UAV (unmanned aerial vehicles)." Several apartments in residential buildings in Voronezh, which is the administrative center of the region of the same name, were damaged, as were houses in the city's suburbs, Gusev said. In the neighboring Lipetsk region, a drone crashed in an industrial zone in the city of Yelets, regional governor Igor Artamonov said on Telegram, adding that one person was injured in the attack. There was no immediate comment from Ukraine about the Russian reports of the attack, and the full extent of the damage caused was unclear.
Int'l Business Times
an hour ago
- Int'l Business Times
US Banks See Lower Recession Risk Despite Tariff Fog
Large US banks reported results that topped estimates Tuesday as executives pointed to American economic resilience and said businesses were adapting to tariff uncertainty. Executives from JPMorgan Chase and Citigroup described US consumers as still fundamentally healthy despite continued risks to the outlook. Both banks now see a lower risk of recession compared with April, when they last reported results. Top officials with the banks also characterized clients as less frazzled by President Donald Trump constantly changing trade policy compared with April, when financial markets were in turmoil. In the last week alone, Trump has threatened deep tariffs on some two dozen countries and spoken of new levies on copper and pharmaceuticals -- announcements that many market watchers remain skeptical will be enacted in light of previous tariff pivots by the US president. "The corporate community ... has sort of accepted that they just need to navigate through this and are kind of getting on with it," JPMorgan Chief Financial Officer Jeremy Barnum told reporters on a conference call. Citigroup CFO Mark Mason said businesses had acquired more "comfort with the uncertainty" compared to recent months. "The general sentiment has improved a bit if you look at things like the prospect of a recession, that has fallen significantly from what it was earlier in the second quarter," Mason told reporters on a conference call. At JPMorgan, second quarter profits came in at $15 billion, down 17 percent from the year-ago period when results were boosted by a one-time equity item. But that translated into $4.96 per share, compared with $4.49 projected by analysts behind higher profits in operating divisions. Revenues were $44.9 billion, down 11 percent from the year-ago period. In Q2 2025, JPMorgan benefited from higher asset management fees, as well as increased trading revenues amid financial market volatility during stretches of the quarter. These aspects helped offset higher technology expenses. JPMorgan chief executive Jamie Dimon said investment banking activity had started slowly in the quarter, "but gained momentum as market sentiment improved," resulting in a seven percent gain. Dimon described the tax cut extensions Trump recently signed into law as "positive" for the economic outlook, along with "potential deregulation," according to a statement. "However, significant risks persist -- including from tariffs and trade uncertainty, worsening geopolitical conditions, high fiscal deficits and elevated asset prices," Dimon said. "As always, we hope for the best but prepare the Firm for a wide range of scenarios." During a conference call with reporters, Dimon said the cautious comments related to possible outcomes and were not a prediction. "The world is kind of pricing in a soft landing," he said. "We've been in that soft landing and it may very well continue." At Citi, profits came in at $4.0 billion, up 25 percent from the year-ago level, while revenues rose eight percent to $21.7 billion. Profits were boosted by higher markets revenue and investment banking fees, among other areas. Mason described the macroeconomic outlook as improved from April, which points to the "underlying strength" of the US private sector and capital markets. "We do anticipate further consumer cooling the second half (of 2025) as tariff effects play through," Mason said, while adding that "the global economic performance has been quite resilient." Shares of JPMorgan were flat at mid-morning Tuesday, while Citigroup rose 2.1 percent.
