Fox Business host Charles Payne raised concerns this week about the Federal Reserve’s policies, warning that it could undermine President-elect Donald Trump’s economic agenda, especially in regard to trade with China and the nation’s growing debt.

Payne’s comments come after the Federal Reserve announced a 0.25% cut in the prime interest rate, reducing the target range to 4.25%-4.50%, and he expressed serious concerns about how interest rate hikes could complicate Trump's economic goals, as the Daily Caller reports.

On Wednesday, the Federal Reserve revealed a slight reduction in the prime interest rate. This decision, however, sparked a warning from Payne, who believes the rate cut could interfere with Trump’s economic policies.

While the stock market’s fluctuations have been a primary focus for many observers, Payne suggested that the real concern lies in how the Fed’s actions could undermine Trump's broader economic plans, especially in terms of trade and government debt.

Payne explained that historical remedies, such as raising interest rates to combat inflation, might no longer work as they once did. He pointed to the significant sums flowing into money markets -- an estimated $350 billion -- as well as $70 billion in dividends that wealthy individuals continue to spend despite economic challenges. Payne argued that this spending behavior is overlooked by the Federal Reserve, which tends to rely on traditional economic data.

Wealthy Americans’ Spending Habits Distort Economic Data

Wealthy Americans have managed to navigate the economic downturn better than most, according to Payne. He cited the stock performance of Restoration Hardware, which saw a 17% increase in a single day, despite the housing market’s worst performance in three decades.

The company attributed its success to strong sales, even though most Americans are facing financial difficulties. Payne pointed out that this disparity illustrates how the wealthy, who benefit from higher interest rates, continue to spend freely, fueling an economic environment that might not align with Trump’s goals.

Payne suggested that the Federal Reserve’s reliance on "ordinary" economic data to gauge inflation fails to capture the complexities of current financial behavior.

"They keep looking at ordinary data, they’re gonna say inflation is still too high. Yeah, you are the reason," Payne remarked. He emphasized that wealthier individuals' spending habits were distorting the overall economic picture, a factor that may have contributed to the Fed’s misguided decisions.

Strong Dollar Complicates U.S. Trade with China

In addition to the domestic economic challenges, Payne also raised concerns about the impact of the Federal Reserve’s policies on U.S. trade relations, particularly with China.

He warned that the strength of the U.S. dollar, which has been driven up by the Fed's actions, could complicate Trump's trade efforts. Payne argued that a stronger dollar makes it more difficult for the U.S. to win a trade war with China.

"You can’t -- it’s very difficult to win a trade war with China with a dollar as high as it is right now because China will just sell stuff in America and exchange it for a lower currency," Payne explained. He believes that the Federal Reserve’s policy is exacerbating the situation, making it harder for Trump’s administration to negotiate with China.

Interest Payments on National Debt Pose Long-Term Challenges

Beyond international trade, Payne also raised alarms about the long-term financial implications of the Federal Reserve's interest rate cuts.

According to Payne, rising interest payments on the national debt pose a significant threat to the country’s fiscal health. Currently, the U.S. government is paying about 12-15% of its tax revenue on interest, and projections suggest that this could rise to 20% during Trump’s presidency.

Payne expressed skepticism about how the country could grow or save when such a large portion of revenue is devoted to interest payments. "How can you save a nation, how can you grow a nation when 20% of the money you take in goes to interest payments?" Payne asked. He believes that this fiscal burden will limit the government's ability to fund other essential programs.

Payne Warns of Strain on Trump's Economic Plans

In conclusion, Payne cautioned that the Federal Reserve's current policies, particularly the recent interest rate cut, could put a significant strain on Trump’s economic plans.

"So Powell what he’s doing right now, what happened yesterday, puts a real crimp in President Trump’s plans and it’s going to cause a lot of friction," he said. According to Payne, this friction could lead to economic setbacks that will be difficult to overcome during Trump’s presidency.

As the U.S. faces the possibility of increased interest payments and a rising debt burden, the debate over the Federal Reserve's policies is likely to continue. Payne’s commentary has sparked conversation about how the central bank’s actions may impact the broader economy and the president’s ability to implement his economic agenda.