“There’s a game of chicken going on here, and the markets are caught in the middle,” Washington insider and attorney Andy Friedman said late Friday.
Referring to tensions between President Donald Trump and the Federal Reserve over interest rates, the popular speaker said this situation “overlays” the market’s current up-and-down cycle, which is tied to Trump’s vascillation between imposing tariffs and reaching trade deals.
“Trump’s saying, ‘I wish you would cut [rates more]. I will keep raising tariffs and threaten the economy and make you lower rates,’” explained Friedman, author of The Washington Update.
“We do not know if this [approach] will keep the Fed lowering rates,” he added. “At some point, the Fed could say, ‘If we keep lowering rates, we will have inflation’ … and [it] could call Trump’s bluff.”
What might end this game of chicken? “That’s if we get a trade agreement with China,” Friedman said.