Trump Unwavering in Criticism of Jerome Powell
Despite publicly stating he has “no intention” of firing Federal Reserve Chairman Jerome Powell, President Donald Trump continues to criticize Powell’s handling of interest rates. In a conversation on Wednesday evening, Trump reiterated his dissatisfaction with Powell, claiming that the Fed chair is making a “mistake” by not lowering interest rates more aggressively.
“I believe he’s making a mistake by not lowering interest rates,” Trump remarked, emphasizing that Powell is “keeping rates too high” and that the Fed was “late” in addressing inflation earlier in the decade. Trump’s remarks seem to underline his continued frustration with Powell’s approach to monetary policy, even as he assures that Powell’s position is not in jeopardy.
Trump’s Increasing Criticism Following Powell’s Speech
Trump’s recent criticism comes after Powell’s speech last week, where the Fed chair warned that Trump’s aggressive tariffs could lead to higher inflation and slower economic growth. This statement appeared to have heightened tensions between the president and the Federal Reserve. In response, Trump took to social media, calling for “pre-emptive rate cuts” and deriding Powell as a “major loser.” Trump’s language reflected his belief that Powell has been too slow to act on inflation and interest rates.
“There can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW,” Trump wrote in a post on Monday.
Fed’s Cautious Stance Amid Uncertainty
Despite Trump’s calls for action, many Federal Reserve officials, including Powell, have emphasized a more cautious approach. Cleveland Fed President Beth Hammack stated on Wednesday that “this is not a good time to be pre-emptive” with monetary policy. Hammack, along with other Fed officials, advocates for patience as they continue to monitor economic developments before making any drastic moves.
Minneapolis Fed President Neel Kashkari also suggested that the bar for cutting rates is currently higher to maintain inflation expectations, especially given the uncertainty created by tariffs. Similarly, Federal Reserve Governor Adriana Kugler has expressed a preference for holding rates steady unless inflation risks rise further.
Powell’s Focus on Inflation Control
Powell has repeatedly stressed that inflation control remains a primary goal for the Fed. He has indicated that without price stability, achieving a strong job market would be unsustainable. However, he has also acknowledged the uncertainty surrounding the long-term effects of tariffs on inflation, noting that it remains unclear whether these effects will be temporary or persistent.
Continued Uncertainty as Tariffs Loom
As the trade war continues to unfold, with tariffs still high, Powell and other Fed officials have made it clear that the Fed’s policies will be guided by incoming economic data, especially concerning inflationary pressures. While Trump continues to push for more immediate action, the Federal Reserve seems focused on taking a more measured approach, aware of the potential risks of prematurely cutting rates.
This ongoing tension between the White House and the Federal Reserve underscores the complexity of managing monetary policy in a time of economic uncertainty and trade disruption. Trump’s frequent critiques of Powell highlight the challenges facing both the administration and the Fed as they navigate the impacts of tariffs and global economic shifts.
