Topline
President Donald Trump name called Federal Reserve Chairman Jerome Powell for declining to lower interest rates, as Trump has continuously demanded, in the latest White House criticism of the historically operationally independent central bank and its top-ranking official, a Trump appointee.
Trump has repeatedly criticized Jerome Powell, right, since nominating him to his post atop the ... More
Trump derided Powell as a “numbskull” in a lengthy tangent Thursday morning, in which Trump called himself a “genius,” urging rate cuts.
“I may have to force something” on rates, said Trump, upping the pressure on his campaign against Powell, who is just one of 12 voters on the Fed’s rate-setting committee.
Trump’s comments come amid a two-day blitz against the Fed and Powell, as Vice President JD Vance posted to the X social media platform Wednesday morning that “the refusal by the Fed to cut rates is monetary malpractice.”
Vance’s critique came immediately after the Bureau of Labor Statistics released May’s consumer price index inflation report, which revealed less price increases than economists anticipated.
Trump, who has loudly called for the Fed to lower rates since taking office in January and even teased the firing of Fed Chairman Jerome Powell, went even further in response to the tame inflation update, calling for the Fed to lower rates by a full percentage point, a highly aggressive and improbable move.
The U.S. would “pay much less interest” on the swelling national debt if the Fed bent to his demands, argued Trump, an at least somewhat misguided argument considering the interest rates paid by the U.S., based on the yields investors are willing to pay for debt issued by the Treasury Department, is not the same as the rate the Fed determines.
“I don't know why it would be so bad, but I'm not going to fire him,” Trump said about Powell on Thursday.
3%. That’s the market-implied probability the Fed’s policy-setting committee will cut rates at its meeting next week, according to CME Group’s FedWatch Tool tracking derivatives contracts on Fed policy.
To the White House’s point, recent economic data does approach the conditions normally preceding interest rate cuts, which typically happen when the labor market exhibits signs of weakness as inflation is tolerable. Core CPI inflation, which excludes more volatile food and energy prices, was 2.8% in May, nearly four percentage points its 2022 apex. Hiring has slowed considerably to start this year, as the 127,000 average jobs added during 2025’s first five months is much lower than the 180,000 during last year’s comparable stretch. However, Powell and other Fed staff have expressed the need for more caution policy changes than normal given the unknown effect of Trump’s tariffs. Experts largely agree tariffs will result in significantly higher inflation, and Goldman Sachs economists predict core CPI will climb to 3.5% by December, well above policymakers’ long held 2% target.
After slashing rates to near zero in 2020 to stimulate the economy during the COVID-19 slowdown, the Fed hiked rates to their highest level in 23 years by 2023 in response to surging inflation. The Fed lowered rates from the 5.25% to 5.5% target range to the current 4.25% to 4.5% range from September to December 2024, but has kept rates firm as it takes a wait-and-see approach on the Trump economy. Lower rates are politically popular as they support economic growth via lower costs on all forms of borrowing, from mortgages to business loans. Trump appointed Powell to his post during his first Oval Office stint, but quickly soured on the banker, whose term as Fed boss will expire next May.