Key Takeaways
- Former President Donald Trump is urging the Federal Reserve to cut rates.
- Fed Chair Jerome Powell emphasized the legal protection of the Fed’s independence.
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Trump is once again turning up the heat on Fed Chair Jerome Powell, calling for rate cuts and floating the idea of firing him after Powell stood by the Fed’s independence in a recent speech.
In a Truth Social post out early this morning, Trump slammed the Fed’s wait-and-see approach to monetary policy and called Powell’s latest report a “complete mess.”
The president claimed inflation is under control and argued that Powell should lower rates as the European Central Bank (ECB) is expected to do.
“The ECB is expected to cut interest rates for the 7th time, and yet, “Too Late” Jerome Powell of the Fed, who is always TOO LATE AND WRONG,” Trump stated.
“Powell’s termination cannot come fast enough!” Trump wrote, while noting that “the USA is getting RICH ON TARIFFS.”
Trump’s remark comes after Powell, speaking at the Economic Club of Chicago yesterday, stressed that the Fed’s autonomy is protected by statute.
The Fed chair stated that the central bank’s independence has broad bipartisan support. He added that Congress has the authority to alter the law governing the central bank, but suggested that such a change is unlikely.
“Our independence is a matter of law,” Powell said. “Congress has, in our statute, we’re not removable except for cause.”
“Fed independence is very widely understood, and supported in Washington, in Congress, where it really matters,” Powell said.
Powell firmly rejected the possibility of yielding to political influence.
“We’re never going to be influenced by any political pressure. People can say whatever they want,” he said. “We will do what we do strictly without consideration of political or any other extraneous factors.”
Trump has persistently urged the central bank to lower bank rates since his second term commenced.
“I will demand that interest rates drop immediately,” Trump said in a January virtual address to the World Economic Forum in Davos, claiming that lower oil prices would allow the Fed to cut rates to fight inflation.
After the Fed maintained rates at 4.25%-4.5% in late January, Trump criticized Powell on Truth Social, despite inflation measuring 2.9% in December, above the Fed’s 2% target. Trump argued he could address economic challenges through energy production, deregulation, trade rebalancing, and manufacturing revival.
Last month, following another Fed decision to hold rates steady, Trump posted on Truth Social urging rate cuts to ease the economic impact of his planned tariff increases.
US Treasury Secretary Scott Bessent announced this week that the White House will begin interviewing candidates this fall to succeed Powell when his term expires in May 2026.
The Treasury Secretary expressed support for the Fed’s independence despite Trump’s public calls for interest rate cuts. Bessent also noted that he maintains regular meetings with Powell and sees no signs of financial instability requiring emergency action.
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