Trump says he will "demand" interest rates come down, setting up clash with Fed

• The Fed — led by Jerome Powell, who Trump first nominated — makes its borrowing costs decisions independent of the White House.
• Any sense of political interference in its interest rate decision-making process would roil financial markets.

What they're saying: "I'll demand that interest rates drop immediately— and likewise, they should be dropping all over the world," Trump said before an audience of global business leaders and government officials in Davos, Switzerland.

• While Trump did not attend the conference in person, his presence was felt all week. Global leaders, particularly those in Europe, worried about the impact Trump's policies might have on the global economy.

For his part, Powell has lauded the importance of the Fed's political independence.

• "We're supposed to achieve maximum employment and price stability for the benefit of all Americans and keep out of politics completely," Powell said last month at a conference hosted by the New York Times.
• He said he was not concerned about the risk that the Fed could lose its independence.

Driving the news: The Fed has already lowered interest rates by a full percentage point since last September after raising borrowing costs sharply to wrangle inflation.

• While down from its peak, inflation has taken longer than anticipated to return to the Fed's 2% target. Officials signaled fewer rate cuts this year than previously thought as it appeared inflation might be higher for longer.

The intrigue: Trump's own policies might prevent interest rates from lowering further.

• Some Fed officials fretted that Trump's tariffs and hardline immigration policies could reignite inflation — and is one reason why they anticipated fewer rate cuts this year.
• The Fed will begin a two-day policy meeting next week. Financial markets widely anticipate rates will be left unchanged.

In his speech, Trump played up his plans to impose tariffs on goods produced outside the United States.

• "My message to every business in the world is very simple: come make your products in America and we will give you among the lowest taxes of any nation on Earth," Trump said.
• "But if you don't make your product in America, which is your prerogative, then very simply you will have to pay a tariff," he added.

Of note: Trump said he would tell members of OPEC, the oil cartel that includes Saudi Arabia, to lower energy costs.

• "You got to bring it down, which frankly, I'm surprised they didn't do before the election," Trump said.

Go deeper: The paradox of Trump's economic inheritance