Trump Criticizes Fed Chair Powell’s Rate Policy

By Howard Schneider

(Reuters) – U.S. President Donald Trump stated on Thursday that Federal Reserve Chair Jerome Powell’s termination “cannot come fast enough.” He urged the U.S. central bank to cut interest rates, pressure Powell promised to resist as the Fed faces a complex outlook partly due to Trump’s policies.

In a post on his social media platform, Truth Social, Trump stated that Powell “should have lowered interest rates, like the (European Central Bank), long ago, but he should certainly lower them now.”

On the same day, the ECB cut its key rate by a quarter of a point in response to a deteriorating growth outlook influenced by Trump’s efforts to increase U.S. import taxes. This move comes amid expectations for falling euro-area inflation.

In the U.S., Trump’s plans have contributed to a lower growth outlook, with economists polling the likelihood of a recession at 45%. However, policymakers are also concerned about rising inflation.

New York Fed President John Williams, speaking on Fox Business, asserted, “I don’t see any need to change the setting of the fed funds rate anytime soon… It’s about collecting information and understanding the economy this year.”

Currently, the Fed’s benchmark interest rate stands at 4.25%-4.50%. Trump’s comments followed Powell’s assertion at the Economic Club of Chicago that the Fed’s “independence is supported in Washington and Congress,” receiving applause from business executives.

Trump has previously threatened to fire Powell, similar to actions being pursued against other independent policy bodies, an issue presently before the U.S. Supreme Court.

Despite the uncertainties, Powell insisted on Thursday that the Fed maintains its credibility in monetary policy management, which is vital to both the U.S. and global economies. Powell’s term expires in May 2026, creating uncertainty over Trump’s intentions regarding his removal before then.

In his post, Trump criticized Powell for being “always too late and wrong” and labeled Powell’s recent speech as a “complete mess!”

Powell had earlier indicated that Trump’s tariff policies pose risks to inflation and employment goals set by Congress. He emphasized that the Fed remains “well positioned to wait for greater clarity” on the economic impact of Trump’s tariffs, which he designated as an economic “shock” with no clear historical comparison.

Some Fed policymakers are concerned about the immediate impact on jobs and are ready to consider swift rate cuts if necessary. Others worry that Trump’s policies could disrupt inflation expectations, leading to higher interest rates.

This dilemma distinguishes the U.S. Fed from central banks abroad, which acted alongside the Fed last year as global inflation eased. The U.S. Fed had lowered rates by a total of one percentage point in three consecutive meetings. However, efforts to revert inflation to the Fed’s 2% target have stalled significantly since Trump’s inauguration and subsequent policy changes.