- US President, Donald Trump, recently suggested that the Fed lowers interest rates even further.
- Doing so would make them go negative for the first time in US history, which caused a major backlash.
- Many from the crypto industry stood against the decision, and even the Fed's own officials confirmed .
The US Fed already saw a lot of criticism after announcing its unprecedented limitless asset purchase for helping the nation recover from coronavirus pandemic. Now, the US President, Donald Trump, attempted to influence the Federal Reserve into lowering interest rates even further. However, he immediately found himself under fire as the crypto industry experts reacted. US President, Donald Trump, recently attempted to influence the US Federal Reserve into lowering rates. However, he immediately found himself under fire as the crypto industry experts reacted.
Trump calls for negative rates
In a tweet published two days ago, on May 11th, Trump once again suggested that the Fed should lower the rates. According to him, the EU and other countries have already done it, and the US needs to ‘keep pace.’ However, doing so would lead to the Fed taxing people’s savings.
Trump stated that As long as other countries are receiving the benefits of Negative Rates, the USA should also accept the ‘GIFT’. Big numbers!”
Of course, the EU did introduce negative interest rates. It did so back in 2014. Essentially, introducing negative rates means charging banks, as well as savers, to store money.
The Fed itself responded to the idea, with its chair, Jerome Powell, stating that he is against it. However, one ex-official seemingly changed their mind last month, stating that the central bank should go through with it, after all.
If it did so, it would be the first time in US history that the rates went negative. The official in question is the Fed’s former Minneapolis president, Narayana Kocherlakota, who said:
“The U.S. Federal Reserve should fight a rapidly deepening recession by taking interest rates below zero for the first time ever.”
‘Negative rates are not a gift’
Meanwhile, the crypto sector started entering the picture, stating that smaller businesses already suffered due to the coronavirus shutdown. The government made a move to bail out big businesses, while smaller players kept losing. Taxing savers would only worsen the situation.
The situation was additionally tense as Trump’s words came on the day of Bitcoin’s third halving. The coin’s anti-inflation mechanism once again cut the inflow of new units in half. With all that has been going on, it is not surprising that crypto enthusiasts did not have much time for the president and his demands.
However, many of the major names with ties to crypto and traditional industries seem to be against Trump’s decision. This includes Tyler Winklevoss, and even the gold bug, Peter Schiff, who stressed that negative rates ‘are not a gift.’