"Too Late and Wrong": Trump Slams Powell Over Fed Rate Decision

TLDR

Table of Contents

President Trump criticized Fed Chair Jerome Powell, saying his “termination cannot come fast enough”
Trump urged Powell to follow the ECB’s example and cut interest rates
Powell warned Trump’s tariffs would likely cause “higher inflation and slower growth”
Powell stated he intends to serve his full term, which expires in May 2026
Treasury Secretary Scott Bessent plans to begin interviewing Fed chair candidates this fall

President Donald Trump intensified his criticism of Federal Reserve Chair Jerome Powell on Thursday, declaring that “Powell’s termination cannot come fast enough” in a post on Truth Social. The comments came as the European Central Bank (ECB) prepared for its seventh consecutive interest rate cut while the Fed maintains its current rate levels.

Trump’s criticism focused on what he sees as Powell being “always TOO LATE AND WRONG” in monetary policy decisions. The President urged the Fed to follow the ECB’s example and lower interest rates, which he believes should have happened “long ago.”

The escalating tension comes just one day after Powell warned that Trump’s recently announced tariffs would likely generate “higher inflation and slower growth.” Powell cautioned that these economic conditions could create a challenging situation for the Fed.

Tariffs and Economic Uncertainty

Earlier this month, Trump unveiled what analysts describe as the steepest tariffs in more than 100 years, though he later paused some of these measures for 90 days. The announcement caused market volatility and raised new questions about the direction of the US economy.

These tariffs have put pressure on the Fed to consider rate cuts as a potential tool to prevent economic downturn. According to the CME FedWatch tool, investors currently believe there’s an 84% chance the Fed will hold rates at their present level at the next meeting in May.

Powell warned that the economic impact of the tariffs could create tension between the Fed’s dual mandate goals of keeping prices stable while maximizing employment. “We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension,” Powell stated.

Fed Independence Under Scrutiny

Powell has consistently emphasized the independence of the Federal Reserve. During recent comments, he stated that the Fed’s independence is “a matter of law” and pledged not to act in response to political pressure.

The Fed Chair addressed a case currently before the Supreme Court that tests Trump’s ability to remove board members at other independent agencies in Washington. Some Fed watchers worry this could threaten Powell’s position if the administration wins the case.

Powell downplayed these concerns, saying, “I don’t think that’s a case that will apply to the Fed.” He did note that the central bank is “monitoring it carefully.”

Changing White House Stance

Trump began his second term with a softer approach toward the Fed’s monetary policy decisions. He initially indicated he did not intend to fire Powell, whom he had criticized throughout his first term.

Treasury Secretary Scott Bessent and other Trump aides repeatedly stressed that the President was not focused on the Fed. Instead, they claimed Trump was trying to bring down 10-year Treasury yields.

However, recent developments suggest the White House wants a closer relationship with the central bank and other independent agencies. In February, Trump issued an executive order giving his appointees more power over such agencies.

The order preserves the Fed’s control over monetary policy but establishes a closer connection between the Fed’s oversight of major banks and White House priorities.

Trump’s pressure on Powell increased following his April 2 “Liberation Day” tariff announcement. On April 4, Trump posted that “This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates.”

Two days later, he added that “the slow moving Fed should cut rates!” Despite this pressure, Powell has remained firm in his position.

Powell’s term as Fed Chair expires in May 2026, and he has stated his intention to serve the full term. “I fully intend to serve all of my term,” Powell said on April 4.

According to Bessent, the Treasury Department plans to begin interviewing candidates for the Fed chair position in fall 2025.

Stay Ahead of the Market with Benzinga Pro!

Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders: