(Yahoo! Finance) - Donald Trump hinted at a coming clash with Federal Reserve Chair Jerome Powell and other central bankers as he spoke virtually before the World Economic Forum, saying he would "demand" lower interest rates.
He said he would ask Saudi Arabia and OPEC to lower the price of oil and "with oil prices going down, I'll demand that interest rates drop immediately," he told the crowd of business leaders and politicians gathered in Davos, Switzerland, adding that "likewise they should be dropping all over the world."
"Interest rates should follow us," he added, in an apparent reference to the direction he wants US monetary policy to take.
The comment from the new president was the latest sign of a possible collision course between Trump and Powell in the months ahead.
Later on Thursday in the Oval Office, Trump doubled down on his comments by telling reporters he wants rates to come down "a lot" and that he thinks the Fed will listen to him.
He also said he expects to talk directly with Chair Powell "at the right time."
What could become an issue is that Powell and his colleagues at the Fed have sent signals that rates may not be changing for a while, after having lowered them by a full percentage point at the end of 2024. Investors are betting rates won't change at a meeting next week.
In fact, Fed officials recently lowered their forecasts for additional rate cuts in 2025 from four to two, with some citing their concerns about the effect of Trump administration policies.
The new rate comments from Trump came as part of a wide-ranging and at times contentious appearance from the new president before assembled business leaders.
The president also said if businesses don’t move their manufacturing to the US "you will pay a tariff" and had a testy back-and-forth with Bank of America (BAC) CEO Brian Moynihan, saying, “I hope you start opening your bank to conservatives.”
The rhetoric on rates from Trump Thursday was also a notable escalation of the president's recent commentary about the central bank.
Allies of Trump during the 2024 campaign considered ideas that would have amounted to a direct undermining of central bank independence.
But Trump himself appeared to try and calm fears in recent months, saying simply wanted a “say” and that those inputs would be in public commentary as was common in Trump 1.0. Trump said last month on NBC's Meet the Press that he has no plans to remove Powell before the chair's term ends.
But on the campaign trail, Trump regularly weighed in with criticisms of Powell, saying he was often wrong.
And after Trump’s win in November, Powell has also staked out seemingly immovable ground, saying there is “no legal authority” for him to be removed before his term as chair ends in 2026.
Caught in the middle are business leaders who are supportive of Fed independence. It's a list that includes Moynihan, who participated in Thursday's questioning.
"I think that our Federal Reserve, an independent central bank, is a good place to be," Moynihan said at Yahoo Finance's Invest conference last year.
Also in the mix are a chorus of Powell and Fed critics that surround Trump. His treasury secretary nominee, Scott Bessent, said last year in a Barron’s interview that Trump could appoint a "shadow chair" to undermine Powell. Elon Musk has said more recently that the central bank is "absurdly overstaffed."
Bessent at least has backed away from his shadow chair idea and said at his recent confirmation hearings he is looking for good relationships with Powell.
He told Senate lawmakers that the Federal Reserve should remain independent, but that Trump "is going to make his views known" as president.
By Ben Werschkul - Washington Correspondent
