Editorial: Trump must address Inflation and interest rates

As Donald Trump, the once and future president of the United States, prepares to take control of the executive branch of the federal government — as much as any one person can control that massive enterprise — he must take steps to make Americans confident in the national economy.

Not the high finance part of the economy, but the retail level where most of the people who voted for him live.

Consider interest rates, which discourage people from buying motor vehicles or buying houses. Young families feel they have been shut out of buying a house and must remain in rental housing until interest rates return to a level where they can afford to borrow money. They could borrow at a high interest rate now and plan to refinance when rates fall, but who knows when that will be?

On Thursday, the Federal Reserve cut its benchmark rate to about 4.6%, down from a four-decade high of 5.3%. According to the Associated Press, the Fed had kept its rate that high for more than a year to fight inflation. The annual inflation has since fallen from a 9.1% peak in mid-2022 to a 3 1/2-year low of 2.4% in September, the AP reported.

The Fed's target rate for inflation is 2% annually. The inflation rate is close to the target, but it's not there yet. The Fed is moving cautiously so it does not set things in motion that will reignite inflation.

The Fed took its action the same day Stellantis announced it will lay off about 1,100 workers at its Jeep factory in Toledo, Ohio, because of slow sales. Stellantis is one of many automakers to announce job cutbacks recently. There are many reasons people aren't buying new cars the way they used to. The cost of borrowing money is one of them.

If people don't buy cars, steelmakers don't sell as much steel. This filters through several industries and affects many of the people whose votes gave Trump his victory on Tuesday.

According to the AP, when asked at his news conference Thursday about Americans who are feeling little relief from the pain of high prices and who helped fuel Trump's victory, Powell said, "I think what needs to happen is happening, and for the most part has happened, but it will be some time before people regain their confidence and feel that."

The Fed is one of many forces affecting interest rates. The 10-year Treasury bond market is one, and financial experts say those rates remain high despite the Fed's recent rate cuts.

It appears there are competing visions of what is good for the economy. Trump must decide if he will let things run their course as they are now or if he will put his thumb on one side of the scale to benefit one group over another. He will need to decide if immediate action is needed or if his supporters can afford to wait "some time."

His decision could lead to those all-too-common unintended consequences that could affect how his party does in the 2026 and 2028 elections.