Trump Escalates Pressure on Powell for Rate Cuts as Markets Stabilize at 97.4% Hold Probability Before July FOMC

President Donald Trump escalated public pressure on Federal Reserve Chair Jerome Powell during an unprecedented July 24, 2025, visit to the central bank’s headquarters, demanding immediate interest rate cuts and criticizing the Fed’s leadership. Wearing matching hard hats, Trump and Powell toured the $2.5 billion renovation project, a subject of recent contention after Trump accused Powell of mismanaging costs. During the tour, Trump claimed the renovation expenses were “even higher than previously known,” prompting Powell to correct him, clarifying that Trump had conflated costs from a completed project with the current one [1][3]. Despite the exchange, Trump dismissed suggestions of removing Powell, calling the notion of firing him a “big move” and stating it would not be “necessary” [2].

The visit marked the first time a sitting president had toured the Fed in nearly two decades. Trump, who has repeatedly criticized Powell for refusing to lower rates, reiterated his belief that reducing the benchmark interest rate would “help the U.S.” He also questioned Powell’s competence, asserting that a real estate developer would “fire” a project manager for exceeding budgets. However, Powell emphasized the Fed’s independence, noting that while the president can remove the chair for “cause,” such an action has no historical precedent [2][4].

Trump’s push for rate cuts comes amid a backdrop of seven consecutive months of Fed inaction, as policymakers await clarity on the economic impact of the president’s tariff policies. Powell, in a prior statement, left the door open for a potential rate reduction as soon as the Fed’s next meeting in late July, though he stressed decisions would hinge on evolving data [2]. The visit sent ripples through financial markets, with stock prices initially tumbling and bond yields surging before stabilizing after Trump disavowed aggressive plans to replace Powell [4].

The episode underscores growing tensions between the executive branch and the Fed’s autonomous governance. While Trump has long advocated for lower rates, Powell and the central bank have prioritized inflation control, arguing that premature cuts could destabilize economic recovery. Analysts note that Trump’s public criticism risks undermining the Fed’s credibility, as its independence is a cornerstone of monetary policy stability [1][3]. The president’s actions also highlight a broader debate over the balance of power between elected officials and independent institutions, particularly in an election year.

Trump’s advisors reportedly echo similar sentiments, viewing rate cuts as a tool to energize the economy ahead of the next election cycle. Even conservative economists who once supported tighter monetary policies are now coming around to the idea that it’s time for rate reductions to sustain U.S. growth [4]. The president’s direct message—“LOWER INTEREST RATES!”—aligns with his long-standing criticism of the Fed’s cautious approach. While Trump insists there is no plan to fire Powell, his sustained rhetoric has already influenced investor sentiment and Fed communication strategy [4].

With the July FOMC meeting approaching, the CME FedWatch Tool puts the odds at 97.4% that the interest rate will remain in the 4.25%-4.5% band this month. However, markets are pricing potential cuts for the second half of 2025, contingent on inflation easing and economic signals aligning with Trump’s optimistic vision [4]. Federal Reserve President Mary Daly’s recent comments, suggesting two rate cuts this year could be appropriate, further signal shifting dynamics in the debate [4].

Source: [1] [Trump Fed visit: Powell pressure campaign ramps up](https://www.cnbc.com/2025/07/24/trump-powell-fed-visit.html) (CNBC) [2] [Trump, Powell stand together after president's interest rate ...](https://www.bloomberg.com/news/articles/2025-07-24/trump-says-powell-will-join-him-to-tour-fed-s-renovation-work) (Bloomberg) [3] [Powell Fact-Checks Trump on Cost of Fed Renovations](https://www.nytimes.com/live/2025/07/24/us/trump-federal-reserve-powell) (The New York Times) [4] [Trump Says He Won't Fire Powell Despite Bout of Bickering ...](https://www.wsj.com/economy/central-banking/trump-to-tour-federal-reserve-ramping-up-pressure-campaign-on-powell-58df9734) (The Wall Street Journal)