If Trump intervenes in Fed, upheaval could ensue

An independent central bank is seen by most (including this newsletter) as the bedrock of a functional economy. Officials steer the economy by calibrating the benchmark interest rate on which bank loans and mortgages, among other debt, are based.

Corporations and consumers, in general, like low interest rates because the cost of borrowing is cheaper. The former is incentivized to expand and invest, which, in turn, tend to increase income and spending among the latter. But such behavior can overheat the economy, causing prices to shoot up.

U.S. President Donald Trump’s repeated calls for Federal Reserve Chair Jerome Powell to cut interest rates might make businesses and people happy — at the cost of letting inflation run rampant again. Factor in Trump’s tariffs, which are taxes on imports and hence fundamentally price increases, and inflation could be getting two shots in the arm.

That’s why central bankers tend to operate independently from the government. An administration that aims to please the populace might cut rates despite high inflation, leading to further economic difficulties.

It’s a relief markets in the U.S. and Europe were on a break for the Good Friday holiday when Trump made his comments.

Trump again calls for Powell to cut rates
U.S. President Donald Trump said Friday that “if we had a Fed Chairman that understood what he was doing, interest rates would be coming down, too.” The White House said Friday that officials are assessing whether they can remove the Fed chair. This is not the first time Trump has criticized Powell’s approach to U.S. monetary policy.

Growing disapproval of Trump’s economic handling
According to a CNBC survey of 1,000 Americans, 55% of respondents disapproved of Trump’s handling of the economy, the first time in any CNBC poll that he has been net negative on the economy while president. More Americans now believe the economy will get worse than at any time since 2023, and they are sharply more pessimistic about the stock market, according to survey results.

China keeps interest rates steady
Asia-Pacific markets were mixed Monday. Japan’s Nikkei 225 lost roughly 1.3%. However, mainland China’s CSI 300 added around 0.3% as the People’s Bank of China kept its loan prime rates unchanged. The 1-year LPR currently stands at 3.1% and the 5-year rate is at 3.6%. Economists polled by Reuters had expected this outcome, which suggests the PBOC is prioritizing the stability of the yuan over stimulating the economy.

Beijing vows ‘reciprocal countermeasures’
China’s Ministry of Commerce warned on Monday that Beijing firmly opposes any party reaching a deal at the expense of China’s interests. If this happens, China will not accept it and will resolutely take reciprocal countermeasures,” according to a CNBC translation. The Trump administration is reportedly planning to use tariff negotiations to pressure U.S. partners into curtailing their dealings with China. 

U.S economic activity might ‘fall off’ in summer
The U.S. economy could be experiencing an elevated level of activity now as shoppers and businesses stock up on goods before tariffs kick in, Chicago Fed President Austan Goolsbee said Sunday. “Activity might look artificially high in the initial, and then by the summer, might fall off — because people have bought it all.” Sectors most affected include the auto industry and electric components, Goolsbee said.

Executive order to overhaul State Department
The Trump administration could soon roll out sweeping changes to the U.S. State Department, according to a 16-page draft executive order obtained by CNBC. If enacted, the order would shutter American embassies across Southern Africa, eliminate bureaus that work on issues like democracy and human rights, as well as international organizations like the United Nations.

[PRO] Earnings might displace tariffs as focus
Market gyrations because of Trump tariffs might be subdued — but not entirely subside — this week, according to strategists. Investor attention will turn to first-quarter earnings reports, with Tesla and Alphabet announcing their performance on Tuesday and Thursday, respectively.

Trump tariffs push Asian trade partners to weigh investing in massive Alaska energy project

Alaska has long sought to build an 800-mile pipeline that would eventually cool gas into liquid for export to Asia. The project, which has a staggering price tag topping $40 billion, has been stuck on the drawing board for years.

Alaska LNG, as the project is known, is showing new signs of life — with Trump touting the project as a national priority. U.S. Treasury Secretary Scott Bessent said earlier this month that the liquified natural gas project could play an important role in trade negotiations with South Korea, Japan and Taiwan.

“We are thinking about a big LNG project in Alaska that South Korea, Japan [and] Taiwan are interested in financing and taking a substantial portion of the offtake,” Bessent told reporters on April 9, saying such an agreement would help meet Trump’s goal of reducing the U.S. trade deficit.