(Firstly, having been away for a couple of weeks my thanks to Nick and BQ for covering the blog, less thanks for putting up such good stuff that now I need to up my game!)
In the USA, much like the UK, the Federal Reserve is an independent body. They make decisions on their own balance sheet and set decisions on interest rates by dint of their reading of the market. The US President and rest of the Government are just bystanders.
Of course, it is not in the President's interest to endure this. After all, the Fed has no elections to win and the current President is very focused on winning one in October next year.
Now as we all know, economics and a good economy is not everything or else in the UK we would not have had Blair as Prime Minister in the late 1990's. However, there is a small correlation with plenty of jobs and a growing economy helping incumbent Governments.
As such, Mr Trump does not want the Fed to raise rates. In the Fed's view the US economy is at the end of a long-expansionary period. They have had very low rates and a huge amount of Quantitative Easing to juice the economy after the Financial Crash of 2008. Now the banking system is nearly recovered and the US is steadily creating plenty of jobs. House prices are rising and the stock market sits at all time highs.
So taking away the punch bowl would seems a logical thing to do. But raising rates may slow the economy and Trump does not want that with only 14 months to an election. Interest rate rises are delayed action too (though I doubt now the old mantra of taking 2 years to feed into the economy, modern tech and communications will have seriously reduced this).
What is Trump to do when all this is out of his control? Well, he could start a trade war with China. This is in his gift as President. Slapping Tariff's on China has the effect of slowing trade and taking the shine off the economy. As a result, it makes the Fed's predictions about the economy change and so with their change in viewpoint, comes a change in policy.
Last week, the Fed lowered interest rates, in due course this will come to be seen as a poor policy move, just as raising rates in early 2007/8 was the wrong thing to do (and as we wrote back then too!).
They lowered rates because a $300 billion trade war with China is not good for the US economy.
However, Trump can, and indeed has, fluctuated wildly with the trade war rhetoric and has the power to end the trade war tomorrow. He is far more flexible than the Fed and has fewer constraints (no monthly meetings or pesky Boards to convince).
Trump can game the system this way for domestic monetary policy. It is a very clever way to get change, albeit literally playing with the livelihoods of Americans in the process - but hey, what else is a President supposed to do?