What will the Fed do with interest rates and how will Trump react?

foxbusiness.com:

Speaking before the World Economic Forum in Davos, Switzerland, Trump said he’ll call for interest rates to be lower than current levels. A possible sign he is setting up a possible battle with the Federal Reserve.

The Federal Reserve is set to announce its next interest rate move on Wednesday, which could prompt a reaction from President Donald Trump, who recently called for the Fed to lower interest rates.

Members of the Federal Open Market Committee (FOMC) are expected to leave the target for the benchmark federal funds rate unchanged at a range of 4.25% to 4.5% – which would be the central bank's first pause in this rate-cutting cycle following three consecutive cuts that brought rates down from 5.25% to 5.5%.

Inflation has persisted in the economy despite easing considerably from the 40-year high of 9.1% annual inflation recorded in June 2022. The most recent reading of the consumer price index (CPI) came in at 2.9%, above the Fed's 2% target rate. Due in large part to stubborn inflation, the probability of Fed pause at the January meeting was 99.5%, according to the CME FedWatch tool. 

The Fed's anticipated pause could prompt Trump to renew his criticism of the central bank and Fed Chair Jerome Powell, following the president's call for lower interest rates last week.

TRUMP SAYS HE WON'T FIRE FED CHAIR JEROME POWELL

President Donald Trump nominated Fed Chair Jerome Powell to the role in 2017 but has criticized the central bank's policies under his leadership. (SAUL LOEB/AFP via Getty Images / Getty Images)

In a speech to the World Economic Forum last week, President Trump said that he plans to bring down the price of oil and, in turn, energy prices to address inflation – which he said should serve as the impetus