KKR’s Henry Kravis warns against politicizing the Fed after Trump remarks

Investing.com -- Henry Kravis, co-executive chairman of U.S. private equity giant KKR & Co., warned against political interference at the Federal Reserve as President Donald Trump escalated his calls for the central bank to swiftly and sharply cut interest rates.

“It would be a huge mistake if a central bank were to become politicized,” Kravis told French business daily Les Echos. He said he held “a lot of admiration” for Fed Chair Jerome Powell and expressed confidence that Powell would move to ease policy as the economy shows signs of slowing and the labor market weakens.

“In any country, the decision must be independent, based on data,” Kravis said, pointing to Turkey as an example where government influence over monetary policy proved to be detrimental for the economy.

Trump on Monday demanded a “bigger” rate cut from Powell in a social media post ahead of this week’s Federal Open Market Committee meeting.

“‘Too Late’ MUST CUT INTEREST RATES, NOW, AND BIGGER THAN HE HAD IN MIND. HOUSING WILL SOAR!!!” the president wrote, reviving the nickname “Too Late” he has given Powell for his cautious approach.

The Fed has maintained high rates throughout the year, aiming to restrain inflation partly fueled by Trump’s tariffs.

Financial markets are now pricing in a 96% chance of a quarter-point cut on Wednesday, according to the CME Group’s FedWatch tool, which tracks futures market pricing.

Trump, however, has repeatedly pressed for deeper easing. He argued in July that rates were “at least” three percentage points too high.

The president has argued that cutting rates more aggressively would reduce the government’s interest burden and push down mortgage costs, potentially boosting housing. But some economists caution that overly rapid reductions could have unintended consequences.

Beyond his public pressure campaign, Trump has also taken steps to increase the White House’s influence over the central bank, which is designed to operate independently from political control.