Trump threatens partial trade stop unless Fed lowers base rate

US President Donald Trump has threatened to halt trade with certain countries if the US Federal Reserve doesn't reduce its base interest rate, according to a post on his Truth Social platform. Trump claimed that the labor market had grown substantially more than anticipated, justifying the need for lower interest rates. However, economists argue that a robust labor market could lead to wage growth and increased inflation risk.

Trump did not address the fact that inflation in the US has been above the Fed's 2% target for over five years and did not clarify the link between the desired interest rate cut and the trade deficit with specific countries.

The US labor market showed strong recent growth, with the number of employed individuals rising by 162,000 in August, surpassing economists' expectations of a 55,000 increase. This contrasts with the disappointing labor market performance in July. The Federal Reserve Governor Kevin Warsh emphasized his priority for price stability and hinted at a possible interest rate hike. Inflation figures for the US are expected to be released next Friday.