ROI — Trump may not see another rate cut as president: McGeever

(Repeats item that ran earlier, with no change to text. ) By Jamie McGeever ORLANDO, Florida, Sept 17 (Reuters) — As The Rolling Stones famously said, you can't always get what you want. Apparently, not even if you're the most powerful person on Earth. 00%, the first rise in more than three years.

S. " Unfortunately for Trump, his calls for a fed funds rate of 1% or lower will almost certainly not be met during the remainder of his presidency, barring an unforeseen catastrophe that forces the Fed to slash rates to zero, as it did during the global financial crisis and the COVID-19 pandemic. S. midterm elections.

Trump insisted on Wednesday that he has confidence in Fed Chair Kevin Warsh, but it's safe to say he would not welcome another hike just before voters go to the polls. The president’s approval ratings are already near the lowest in his presidency, and polls suggest his Republican Party could lose control of the House of Representatives and possibly the Senate, too. Another notch higher in borrowing costs might help ease voters' concerns over inflation, but Trump is unlikely to see it that way.

Many Fed-watchers had previously dismissed the possibility of an October hike, arguing that the Fed — and Warsh in particular — would want to avoid any appearance of acting with a political motive. But given Wednesday's unanimous rate hike, the upwardly revised rate projections from Fed policymakers and Warsh's surprisingly hawkish press conference, a move in October is now very much on the table. Higher For Longer Will Trump see another rate cut before he leaves the White House? 9%, respectively.

These broad projections still imply a slight easing of policy over the course of 2028, Trump's last full year in the White House before the January 2029 handover to his successor. But it's a close call. S. rates will need to be kept higher for longer.

60%. That's likely down to a combination of deficit and debt worries, lingering doubts over Fed independence and concerns about the factors keeping inflation hot, namely geopolitical conflict, energy price pressures, and AI-related spending. Whatever the cause, the message is clear: Markets expect that rates aren't coming down over the next two years. And that's not what Trump wants to hear.

Upside Risks? He may also have been slightly irked to hear Warsh say "geopolitics" is a key reason why inflation is sticky and bond yields are so elevated. But it's hard to escape the conclusion that, although there are several forces at play here, a major one is the impact of reduced energy supply stemming from the Iran war. At the very least, the onset of hostilities was a clear turning point in the Fed's expected rate path.

Consider this. S. 13% at the end of 2028. 60%.

Or put another way: Before the war traders were pricing in two rate cuts over the rest of Trump's presidency, and now they are pricing in three hikes — on top of the one delivered on Wednesday. That's an extraordinary, extremely hawkish pivot. Traders are pricing in a significantly higher terminal rate than they were before the war. "We see upside risk to the length and size of the hiking cycle," economists at BNP Paribas wrote on Wednesday.

S. " That may be, but the overwhelming majority of observers and experts — including Warsh, it appears — would disagree. So much so that there's a growing likelihood that the Fed's 25 basis-point rate cut last December, under the chairmanship of "clueless" Jerome Powell, will be the last one Trump sees as president. (The opinions expressed here are those of the author, a columnist for Reuters) Enjoying this column?

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