Evelyn Reynolds

President Donald Trump expressed confidence the Federal Reserve will start lowering interest rates, a day after he met with central bank Chair Jerome Powell.
White House budget director Russell Vought kept up the heat on the Fed’s renovation project, pushing the case for a review while pressing for lower interest rates.

President Donald Trump on Friday expressed confidence the Federal Reserve will start lowering interest rates, a day after he met with central bank Chair Jerome Powell.
The president indicated the meeting took a positive tone and believes the Fed is ready to provide the monetary policy easing he has been seeking for months.

“I think we had a very good meeting on interest rates. And [Powell] said to me … very strongly, the country is doing well,” Trump told reporters. “I got that to mean that I think he’s going to start recommending lower rates.”
Powell and his fellow policymakers have been reluctant to lower rates as they wait to see the impact Trump’s tariffs have on inflation. In fact, one argument Powell has made against cutting is that the economy is strong enough that it can withstand higher rates as officials watch how the data evolves.
Prior to Trump’s remarks, White House budget director Russell Vought kept up the heat on the Fed’s renovation project, pushing the case for a review of the central bank while pressing for lower interest rates.
Vought echoed Trump’s desire for the Fed to start easing monetary policy as a way to help the economy and specifically the housing market.
“There’s a whole host of issues with regard to the Fed, and we want to make sure that those questions get answered over time,” Vought said during the “Squawk Box” appearance. “This is not a pressure campaign on the Fed chairman.”

The tone following Thursday’s meeting was more conciliatory after months — and even years — of rancor between the Trump White House and the Powell Fed.
Both sides characterized the tour as positive, with a Fed official releasing a statement Friday saying the central bank was “honored” to welcome Trump as well as other Republican officials.
“We are grateful for the President’s encouragement to complete this important project,” the Fed spokesman said. “We remain committed to continuing to be careful stewards of these resources as we see the project through to completion.”

Pressure to continue

Still, Vought said the White House plans to follow through on what Treasury Secretary Scott Bessent has deemed the need for a review of “the entire” Federal Reserve.
In addition to the issues over the building project and interest rates, officials also have criticized the Fed for the operational deficit it is running as interest rates have held high. The Fed in the past has remitted what it has earned from its investments back to the Treasury but has been running a shortfall that totaled nearly $80 billion in 2024 as interest it pays on bank reserves has outstripped what it is realizing on investments.
“We’re going to continue to articulate our policy concerns with regard to the Fed’s management,” Vought said. “You don’t get to just be at the Fed and not have any criticism directed your way. That is not something that exists in the American political system.”
During the Thursday meeting, Trump also expressed confidence that Powell and his colleagues will see things the president’s way when it comes to rates.
“I believe that the chairman is going to do the right thing,” Trump told reporters then. “I mean, it may be a little too late, as the expression goes, but I believe he’s going to do the right thing.”
Despite the previous rancor, Trump recently has backed off previous threats of trying to fire the Fed chair, and he reiterated Thursday that he doesn’t see the need for Powell to resign.
Futures markets are assigning virtually no chance for a rate cut when the Fed meets next week, with the next move not considered likely until September. Market pricing also is tilted toward the possibility of another cut before the end of the year.

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The deal marked a ‘strategic win’ for New Delhi’s trade diplomacy, economists say.
As much as 99% of Indian goods shipped to Britain will be exempt from tariffs.
The U.K. government estimated its exports to India would see a reduction in weighted average tariff to 3% from 15%.

AYLESBURY, ENGLAND – JULY 24: UK Prime Minister Keir Starmer and Prime Minister Narendra Modi of India walk in the grounds at Chequers on July 24, 2025 in Aylesbury, England.
Kin Cheung | Getty Images News | Getty Images

U.K. and India’s bilateral trade is set to get a more than $34 billion annual boost over the long term following their free trade agreement, with the countries’ leaders calling it a “historic” deal.
The FTA, which slashes duties on goods including textiles, alcohol and automobiles, was signed Thursday in the presence of Indian Prime Minister Narendra Modi and his UK counterpart, Keir Starmer.

Both sides had finalized the trade pact in May after three years of intense negotiations — marked by thorny issues such as visas, tariff reduction and tax breaks. Talks gained momentum and both governments accelerated to seal the deal as U.S. President Donald Trump’s tariff threats sent the world in disarray.
The agreement between the world’s fifth and sixth largest economies is expected to boost their bilateral trade by 25.5 billion pounds per year by 2040. Trade in goods and services stood at over 40 billion pounds in 2024.
The deal offers “huge benefits to both of our countries,” boosting wages, raising living standards and bringing down prices for consumers, Starmer said.
India’s Modi lauded the agreement as “a blueprint for our shared prosperity,” highlighting how Indian goods including textiles, jewelry, agricultural products and engineering items would benefit from a better access to the U.K. market.
As part of the deal, 92% of goods exported by U.K. to India will see tariffs either removed entirely or reduced, while as much as 99% of Indian goods shipped to Britain will be exempt from tariffs.

The U.K.–India trade pact marked a “strategic win” for New Delhi’s trade diplomacy as it brings targeted benefits to Indian goods that previously faced high tariffs or regulatory barriers, said Dhiraj Nim, an economist at ANZ Bank.

The U.K. government estimates its exports to India would see a reduction in weighted average tariffs to 3% from 15%. The agreement still needs to be ratified by both countries’ parliaments, a process that may take several months.
Besides reducing tariffs rates on a wide range of products, the agreement exempts Indian temporary workers in the U.K. and their employers from paying social security contributions for three years. 
Tariffs on U.K. scotch and gin will be halved to 75% from 150%, and drop further to 40% over the next decade, while tariffs on brandy and rum will be cut to 110% initially and end up at 75%.
Auto industry tariffs will see duties lowered to 10% within five years under a quota system, from the current level of up to 110%.
Before the deal, U.K. goods attracted a 14.6% average duty in India and the corresponding figure for Indian goods was 4.2%, according to estimates by Samiran Chakraborty, an economist at Citi Bank.
This is one of the first trade deals signed by India with an advanced economy, according to Chakraborty, noting that U.K. accounted for 3% of India’s total goods trade last year, with a majority being machinery and equipment, followed by textile and footwear.
As the deal offers a boost to Indian sectors such as textiles, gems and jewelry, it will also support employment and industrial growth in India, Nim said.
India’s trade surplus with the U.K. has widened significantly over the past two years and could grow further in the near term as market access improves, according to Nim. Over time, the phased easing of U.K. export barriers — particularly on automobiles, alcoholic beverages and machinery — may help narrow the gap.
“It is hard to say exactly which direction the surplus would go,” Nim said, although overall trade volume is certain to rise.

Mutual wins

The trade agreement could strengthen both countries’ position in their respective ongoing negotiations with trading partners, including the U.S., analysts said.
The U.K.-India deal offered both substantial “leverage versus the U.S.,” said Alicia Garcia Herrero, chief economist at Natixis Bank.
London continues to work on fleshing out the trade pact it agreed with the U.S. in May, and ahead of a potential meeting between Starmer and Trump on Friday, during a personal trip by the U.S. president to Scotland.
The deal with India is projected to boost to British economic output by a further 4.8 billion pounds ($6.5 billion) each year, lifting its gross domestic product that stood at 2.85 trillion pounds in 2024.
For Modi, the trade deal will likely serve as a springboard for India’s ongoing talks with other developed economies and reinforce his push to position his country as a viable trading partner, experts said.
The deal with UK will “set a tone to all the Western powers that … we are ready to trade on our terms. And it’s a big voice, a big support that was provided with this agreement,” Sameep Shastri, vice-president of the BRICS Chamber of Commerce and Industry, told CNBC’s Inside India Friday.
New Delhi is racing to clinch a deal with Washington before Aug. 1, when higher U.S. tariffs of 26% are set to kick in.

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The European Central Bank held its key interest rate at 2% at its July meeting, citing an “exceptionally uncertain” environment due to trade disputes.
The EU remains locked in negotiations with the U.S. over tariff rates, making forecasting growth, inflation and currency moves difficult.
Traders will now be assessing whether recent strength in the euro is concerning the ECB due to its potential deflationary impact.

The President of the European Central Bank Christine Lagarde at the 2025 European Central Bank Forum on Central Banking on June 30, 2025 in Sintra, Portugal.
Horacio Villalobos | Corbis News | Getty Images

The European Central Bank on Thursday kept interest rates steady amid major economic uncertainty, as the European Union scrambles to negotiate a trade agreement with the U.S. before the end of the month.
The ECB has cut interest rates at each of its four meetings so far this year, taking its key deposit facility from 3% in January to 2% in June. Last year it reduced rates from a record high of 4%.

“The environment remains exceptionally uncertain, especially because of trade disputes,” the ECB said in a statement, adding that its outlook for price rise growth remained largely unchanged.

While annual inflation in the euro area hit the central bank’s 2% target last month, traders widely expected a hold in July — in large part due to geopolitical volatility. The U.S. is the EU’s biggest bilateral trade and investment partner and the 27-member bloc exported 503 billion euros ($590 billion) in goods to the States last year.
As of Thursday, the future of that trade relationship remained up in the air, with one possibility being a 15% baseline tariff rate on all EU imports to the U.S., along with retaliatory measures on the EU’s part.
ECB officials have been suggesting for some time that their work in bringing down inflation is nearly done, as it hunts for the so-called “neutral” level at which rates are neither stimulating, nor restricting growth. ECB Chief Economist Philip Lane told CNBC earlier this month that “the last cycle is done, bringing inflation down,” but that policymakers would remain alert to any changes in the medium-term outlook.

Growth risks ’tilted to downside’

In a press conference following the decision, ECB President Christine Lagarde said that the euro zone economy had performed better than expected in the first quarter. That was partly because of front-loading of exports ahead of expected tariff hikes, but also due to stronger private consumption and investment, rising real incomes and easier financing conditions, she said.

The euro zone’s GDP growth came in at a better-than-expected 0.4% in the first three months of the year.
Stressing current levels of uncertainty in forecasting, Lagarde went on to say that risks to growth were “tilted to the downside,” with an escalation in trade tensions potentially dragging down exports, investment and consumption, as well as weighing on business and household sentiment.
Conversely, a quick resolution in trade tensions along with higher European defense and infrastructure spending could boost growth more than previously forecast in the coming months, she said.
Investors have been keen to assess whether the central bank is concerned about the recent appreciation in the euro, which can have a deflationary effect as imports get cheaper.
Lagarde noted Thursday that a stronger euro could “bring inflation down further than expected” and that higher global tariffs could concurrently dampen price rises, if countries with overcapacity reroute their exports to the euro area.
However, she again stressed that the ECB is monitoring a flip-side scenario in which fragmented supply chains constrain the domestic economy and push up prices worldwide. Higher fiscal spending and extreme weather events also risk an uptick in inflation, she said.

ECB keeping all options open

The euro was choppy following the ECB decision, trading around 0.15% lower against the U.S. dollar at 2:11 p.m. in London at $1.175. That is still up from a rate of around $1.026 at the start of the year, as investors have broadly shifted away from the greenback due to political and fiscal uncertainty.
“We may see one more [rate] cut later this year, but the ECB is waiting to see if the threatened imposition of U.S. tariffs of 30% on EU goods from 1st August can be avoided,” Joe Nellis, economic adviser at accountancy MHA, said Thursday.
“If a U.S.-EU trade deal isn’t reached beforehand, the ECB may look at cutting rates again in September to counter-act the barriers to economic growth that tariffs will impose.”
Mark Wall, chief European economist at Deutsche Bank, said that the ECB would be keeping all options on the table — which could even mean a return to rate hikes on the horizon.
“If trade uncertainty fades, the combination of a resilient economy and significant fiscal easing will eventually translate into upside risks to inflation. Markets are not far away from switching focus from the last cut to the first hike,” Wall said.

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President of Queens’ College of Cambridge University Mohamed El-Erian speaks during a panel discussion at the headquarters of the International Monetary Fund during the Annual Meetings of the IMF and World Bank in Washington, D.C., on Oct. 13, 2022.
James Lawler Duggan | Reuters

Mohamed El-Erian on Tuesday called for Federal Reserve Chair Jerome Powell to voluntarily relinquish his position in order to ensure the central bank’s independence, making the chief economic advisor at Allianz one of the first prominent economists to publicly take such a position.
“If Chair Powell’s objective is to safeguard the Fed’s operational autonomy (which I deem vital), then he should resign,” El-Erian, , said in a morning post on X.

El-Erian, also president of Queen’s College at Cambridge University, said he was aware that his view did not align with what he saw as Wall Street consensus that wants Powell to serve out the remainder of his term as chairman, which ends in May 2026. The former co-chief investment officer at Pimco acknowledged, however, that Powell’s resignation would not be a “first best” outcome.
But El-Erian said Powell stepping down would be better than the current scenario, in which he said the Fed is facing “growing and broadening threats” to its independence. El-Erian said these threats would likely only increase if Powell remained Fed chair.
El-Erian referenced Treasury Secretary Scott Bessent’s statement that the Fed had suffered from “mission creep” into areas outside of its core monetary policy responsibilities. Bessent told CNBC on Monday that “the entire” Fed should undergo a review.
The statements come as President Donald Trump and his advisers have stepped up their attacks on Powell over the Fed’s decision to hold interest rates steady since December. Powell has said that Trump’s plan for steep tariffs has created economic uncertainty, pushing the bank to keep rates unchanged as it awaits developments. More

In a CNBC interview, Treasury Secretary Scott Bessent suggested for a review of the Federal Reserve that would go beyond the current controversy over building renovations and look at its overall function.
The comments come amid an intensifying conflict between the White House and the central bank.
Bessent backed the idea that the Fed probably should be easing with inflation mostly moderating.

Treasury Secretary Scott Bessent on Monday suggested a review of the Federal Reserve that would go beyond the current controversy over building renovations and look at its overall function.
“What we need to do is examine the entire Federal Reserve institution and whether they have been successful,” Bessent said during an interview on CNBC’s “Squawk Box.” “Has the organization succeeded in its mission? If this were the [Federal Aviation Administration] and we were having this many mistakes, we would go back and look at why has this happened.”

The comments come amid an intensifying conflict between the White House and the central bank.
Last week saw conflicting reports over whether President Donald Trump was preparing to fire Fed Chair Jerome Powell. Reports from the White House indicated a move was forthcoming, but Trump soon after denied he is readying what would be a legally questionable maneuver.
Bessent has been at the center of the controversy, both as a potential successor at the Fed as well as reports pointing to the Treasury chief as a mediator looking to discourage Trump from ousting Powell.
“President Trump solicits a whole range of opinions and then makes a decision,” Bessent said when asked about a Wall Street Journal report that he had helped convince Trump to stay his hand on Powell. “So he takes a lot of inputs, and at the end of the day it’s his decision.”
Trump has demanded the Fed dramatically lower its benchmark overnight borrowing rate, something that appears unlikely regardless of the chair.

In addition, the administration in recent days has criticized the Fed for cost overruns at the $2.5 billion renovation it has undertaken for two of its buildings in Washington. Administration officials reportedly are planning soon to view the project in person.
On the question of interest rates, Bessent backed the idea that the Fed probably should be easing with inflation mostly moderating.
“They were fear mongering over tariffs, and thus far we have seen very little if any inflation,” Bessent said. “We’ve had great inflation numbers. So, you know, I think this idea [is] of them not being able to break out of a certain mindset. All these PhDs over there, I don’t know what they do.”
The Fed last cut rates in December, which completed a brief easing cycle that brought the fed funds rate down a full percentage point. However, as the Fed eased both mortgage rates and Treasury yields moved higher.
Market pricing indicates the Fed probably will cut again in September. More