Hindustan Times ·
Superpower vs retaining power: Trump's dilemma
At the root of these problems is Trump’s inability to reconcile his idea of acting as the super-power (head of US) and retaining power
Less than two months from now, Donald Trump will face the most important political challenge of his second presidency – the mid-term elections in the US. Irrespective of what happens in the elections, things are pretty bad for him on the economic front. Crude oil and fuel prices have risen sharply, 10-year US bond yields crossed the psychological 5% threshold on Monday and hit a two-decade high on Tuesday. The Federal Reserve is expected to increase interest rates later today. At the root of these problems is Trump’s inability to reconcile his idea of acting as the super-power (head of US) and retaining power.
- Some of US economy’s recent problems predate Trump’s second PresidencyOn Wednesday night, the US Federal Reserve will announce interest rates. Markets widely expect the central bank to increase interest rates, something which Trump has been publicly speaking against, intruding into what is seen as the realm of an independent monetary policy in the US. Personal consumption expenditure inflation has been above the US Fed’s mandated target of 2% for 65 months now, a streak that began amid pandemic-era fiscal stimulus and supply-chain disruptions but has persisted long after those initial pressures eased. The Federal Reserve raised its benchmark interest rate by 5.25 percentage points between March 2022 and July 2023, one of its sharpest tightening cycles in decades, putting upward pressure on retail borrowing costs such as mortgage rates. Although the Fed has cut rates since the end of 2024, borrowing costs remained elevated and could rise further, something Trump believes could hurt him politically.
