Stock markets continued to plunge on Tuesday, dropping another 475 points in late-morning trading, according to a CNN report, even after Federal Reserve Chair Jerome Powell announced the largest single cut in interest rates since the financial crisis of 2008. During an 11 a.m. press conference, Powell said that the move was designed to prop up markets badly shaken by fears over the coronavirus outbreak.
However, one longtime business journalist, Ali Velshi of MSNBC, said that Powell had simply "caved" to pressure from Donald Trump with the interest rate slash. Powell announced that the Fed would cut rates by a half a percentage point — a massive cut that Velshi described as "very rare" in a statement posted to Twitter.
Velshi said that under normal circumstances, such a dramatic rate cut would be a sign that the Federal Reserve has "a grip" on the economy. But not in this case, he added.
"This looks like the Fed caved to Trump's market-obsessed pressure," Velshi wrote.
Stock markets started plunging last week over fears that the coronavirus spread could disrupt economic production, slowing the United States and global economies. One leading economist — Nouriel Roubini, who is best known for predicting the 2008 crash — said last week that he expected markets to tumble by about 40 percent over the year, leading to an economic slowdown that ultimately costs Trump his chance to win the 2020 presidential election.
Even though Trump had been calling for the Federal Reserve to cut rates and engage in "quantitative easing" — a method of increasing the money supply — in order to juice the economy, the cut announced Tuesday by Powell was still not enough for him.
After the Fed announcement of the most drastic interest rate cut in 12 years, Trump demanded more cuts, according to a report by The Hill.
"Not fair to USA. It is finally time for the Federal Reserve to LEAD," Trump wrote in a tweet, quoted by The Hill. "More easing and cutting!"
Trump has been pushing the Federal Reserve to lower interest rates, which already stand at historic lows, at least since last year, claiming that a cut will make the U.S. more competitive in overseas markets. Rate cuts and quantitative easing are designed to cheapen the value of the money supply, which allows borrowers to more easily obtain and pay back loans.
But interest rate cuts would also purportedly benefit Trump personally, according to bestselling author Seth Abramson. He says that Trump's "entire history in business suggests... that he's insanely in debt."