Trump Lambasts Fed Chair Powell Over Interest Rate Policy
President Donald Trump criticized Federal Reserve Chair Jerome Powell, labeling him a "numbskull" amid growing frustration over the Fed's reluctance to reduce interest rates. Speaking at the White House, Trump insisted that slashing rates by two percentage points could save the U.S. economy $600 billion annually, yet Powell remains resistant to such moves.
Calls for Aggressive Monetary Easing Intensify
Trump expressed disbelief that Powell "doesn't see enough reason to cut rates now," emphasizing the economic cost of missed opportunities. While he acknowledged that rate hikes were appropriate during inflation surges, he noted that inflation appears to be declining, hinting at potential executive action if the Fed continues to hold firm.
Economic Indicators Bolster Trump’s Position
His pointed remarks coincided with government data revealing that inflationary pressures eased more than expected in May. This trend has quelled worries about tariff-related price spikes and bolstered the president's argument for interest rate cuts to stimulate growth.
Administration Voices Echo the Pressure on Fed
Trump’s criticism marked the third direct rebuke of Powell by administration officials in as many days. Commerce Secretary Howard Lutnick lamented the missed opportunities, stating, "It's unbelievable how much we would save if [Powell] did his job and cut rates."
On Fox News, Lutnick highlighted that the economy is poised for easing, with inflation considered low enough to warrant action. Meanwhile, Vice President also chimed in, branding the Fed’s hesitation as "monetary malpractice".
Market Reactions and Future Outlook
Despite the political heat, markets appeared largely unfazed. Traders currently assign minimal chances to a rate cut in next week’s Fed meeting or the subsequent July session. However, the probability of a September reduction has climbed to roughly 76%, signaling growing expectations for monetary easing later this year.
Trump’s Stance on Powell’s Position
Investors were rattled earlier this year when Trump hinted at the possibility of firing Powell before his term ends next year. Following market turbulence, such threats have subsided. In Thursday’s remarks, Trump reiterated, "I’m not going to fire" Powell, though he questioned why his dismissal would be unacceptable.
It’s worth noting that Powell and experts have clarified the legal protections limiting presidential authority to remove a Federal Reserve Chair, reinforcing the institution’s independence.
