The Federal Reserve’s Federal Open Market Committee (FOMC) meets this week and is expected to keep its target policy interest rate (the federal funds rate) unchanged at 4.5 percent.

This is unlikely to please Donald Trump who has repeatedly pushed Fed Chairman Jerome Powell and the FOMC to adopt a lower target interest rate and further force down interest rates on federal debt. Moreover, Trump has signaled that he wants the US central bank to be more like the European Central Bank which has been more aggressively forcing down interest rates in recent months. …

Here trump states that his primary purpose for demanding lower interest rates is to bring down borrowing costs. Naturally, Trump, who continues to push for ever larger multi-trillion-dollar deficits, wants to be able to borrow more cheaply, thus freeing up federal dollars so Trump can reward key interest groups with taxpayer money. It’s easy to see why Trump is concerned about this. The Federal government’s interest expenses have ballooned in recent years as the federal debt has soared and as the average interest rate on the debt has nearly doubled since 2021. 2025’s fiscal year will likely be another year in which the US pays more than a trillion dollars just in debt service …

Rather, the Fed should do nothing at all. Powell’s relative lack of action on this front in recent months gives the market some room to breathe. What Trump apparently wants, however, is for the Fed to be more active in its efforts at centrally planning the economy.

This would hardly be an improvement. Alas, long gone are the days when Trump was pledging—probably cynically and disingenuously—to audit the Fed and force a count of all the gold in the US gold reserve. That’s all been long forgotten at the White House, and Trump apparently wants a return to what would have been business as usual under Bernanke or Yellen in the days of quantitative easing massive asset price inflation.