Commerce Secretary Lutnick Slams High US Interest Rates, Challenges Fed
U.S. Commerce Secretary Howard Lutnick publicly criticized the Federal Reserve’s monetary policy, labeling current US interest rates among the highest in developed economies. He accused Fed Chair Jerome Powell of being overly cautious and “afraid of his own shadow” for maintaining elevated rates despite cooling inflation. Lutnick also refuted Powell’s assertion that tariffs on personal computers drove price increases, noting no such tariffs exist and pledging a Commerce Department review before any new levies on semiconductors or computers. This rare public spat between a senior administration official and the independent Fed underscores potential policy uncertainty, raising questions about the future direction of US interest rates, inflation control, and economic growth. Businesses and investors are advised to monitor further statements from both the Commerce Department and the Fed, analyze key economic data, and maintain diversified portfolios amid evolving policy debates.
Bearish
This public disagreement signals policy uncertainty, which often dampens market sentiment and increases volatility. High US interest rates typically lead to tighter liquidity, reducing speculative capital flow into risk assets like cryptocurrencies. Moreover, direct criticism of the Fed’s approach can unsettle investors about future rate hikes or pauses. Historical parallels include Fed disputes in 2018 and 2022, which preceded market pullbacks. In the short term, traders may adopt a cautious stance amid unclear signals on rate trajectory. Over the long term, prolonged high rates can constrain economic growth and limit crypto’s risk-on appeal, reinforcing bearish pressure.