Howard Schneider
(Reuters) – U.S. President Donald Trump said on Thursday that the termination of Fed Chairman Jerome Powell was “not fast enough”, while calling on the U.S. central bank to lower interest rates.
Trump reiterated his position on the speed of cuts in an article on his social media platform Truth Society, saying that Powell “should have lowered like (the European Central Bank) a long time ago, but he should have lowered their interest rates now.”
The Fed’s benchmark interest rate is currently 4.25%-4.50%, which has been in December since lowering interest rates several times late last year.
Trump’s comment came at an event at Powell’s Chicago Economic Club that the Fed’s “independence has been widely understood and supported in places where it really matters in Washington and Congress,” amid applause among the senior business executives’ community asking them to set interest rates that are not related to political pressure or partisan considerations.
Trump sometimes threatens to try to fire Powell, just like his moves before the U.S. Supreme Court with members of other independent policy agencies.
Powell said Thursday that the Fed is watching the case carefully but believes that any decision to the central bank does not apply, and that the credibility of the central bank’s management of monetary policy is important not only to the U.S. economy, but also in the global market, which is believed to satisfy decision-making.
Powell’s term as chair will expire in May 2026. It is not clear from Trump’s language whether he will resign or hope that the Supreme Court’s ruling will allow him to remove Powell as soon as possible.
Trump said in his post that Powell was “always too late and wrong”, criticizing Powell for calling it “another, typical, complete chaos!”
Powell warned Wednesday that Trump’s tariff policy has the potential to drive inflation and employment from central bank targets, which are jointly managed under the mandate of Congress.
Powell said the Fed “has good awaited a clearer state”, indicating that the Fed is not ready to propose policies in any direction or at any rate until Trump’s tariff plan (launched in a dramatic announcement), but is often delayed and still unclear on key aspects – finalized – with the impact on the economy being more obvious.
Fed officials now call it an economic “shock” without clear historical similarities – pushing the economy to higher prices immediately while they undermine sentiment and potential employment.
Some Fed policymakers are concerned that the impact on work may be quick and say they will be ready for rapid cuts. Others are concerned that Trump’s policies and instability in handling the problem may cut inflation expectations and force higher interest rates.
For this dilemma of the Federal Reserve, an economic dilemma that may be compared with the two goals of the central bank, now distinguishing the Federal Reserve from its major overseas counterparts abroad.
The Fed did act together with other central banks last year and lowered the full percentage point of the U.S. benchmark policy rate in three consecutive meetings, to the current range of 4.25% to 4.5%.
But progress to return to inflation to the Fed’s 2% target stagnated in the fall, prompting policymakers to pause further cuts until obvious price pressures will begin to ease again.
Trump arrived at the White House on January 20, and since then, the ambiguity of the outlook for the Fed has become even more engulfed and has led to predictions from other countries that have put their central banks on track to continue to lower interest rates.
(Reported by Angela Christy and Gursimran Kaur in Bangalore; Editor of Chizu Nomiyama)
