Donald Trump last night set the scene for a clash with the US Federal Reserve after he demanded an immediate cut in interest rates.
Addressing the World Economic Forum in Davos by video link, the US President said borrowing costs in America and around the world ‘should be dropping’.
He also said he wants to lower global oil prices as he set out his wide-ranging agenda to business leaders and politicians gathered in the Swiss ski resort.
‘I’ll demand that interest rates drop immediately. And likewise, they should be dropping all over the world,’ Trump said.
‘I’m also going to ask Saudi Arabia and Opec to bring down the cost of oil.’
The demand for an immediate fall in interest rates is likely to raise eyebrows at the Fed, the US central bank, ahead of next week’s meeting when officials will make their next move on borrowing costs.
Rate cuts: President Trump (pictured) said borrowing costs in America and around the world ‘should be dropping’
The Fed, led by chairman Jerome Powell, is independent of the government – just as the Bank of England is in the UK.
It cut interest rates three times last year, with the final cut to between 4.25 per cent and 4.5 per cent coming in December, but is widely expected to make no change next week.
Such a move would put Powell on a collision course with Trump again after the pair clashed during the President’s first term in office.
Oil prices tumbled as Trump spoke, however, falling from close to $79.50 a barrel to just above $78.
‘Trump’s call for lower oil prices will naturally be welcomed by consumers and businesses but received warily by the US oil industry and other global suppliers,’ said Clay Seigle, senior fellow for energy security at the Center for Strategic and International Studies in the US.
As well as urging Saudi Arabia to lower the oil price, Trump pledged to increase drilling in the US.
The President, who has vowed to withdraw the US from the Paris climate agreement and used his inauguration to declare the country will ‘drill, baby drill’, told the gathering: ‘The United States has the largest amount of oil and gas of any country on Earth, and we’re going to use it.
Not only will this reduce the cost of virtually all goods and services, it will make the United States a manufacturing superpower.’
The remarks, Trump’s first to global leaders since he was sworn in on Monday, bolster the message that his second term will eschew free market norms inside the US and out.
‘It’s not particularly strange that you want to foster growth in your own country,’ said Espen Barth Eide, minister of foreign affairs for Norway.
‘But of course, we believe that we are better off in the world of free trade, where we exchange goods and services openly.’
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