Trump's Fed Feud Underlines Tension Between Politics and Monetary Independence

President Donald Trump escalated his public criticism of the Federal Reserve on Wednesday, directly warning Treasury Secretary Scott Bessent that high interest rates must be addressed or face severe consequences. During a high-profile U.S.-Saudi Investment Forum in Washington, D.C., Trump described Federal Reserve Chair Jerome Powell as "grossly incompetent" and declared, "If you don't get it fixed fast, I'm going to fire your a. OK?" The remarks underscored Trump's long-standing frustration with the Fed's monetary policy and added pressure on his administration to lower borrowing costs amid persistent inflation concerns according to reports.

The president's outburst occurred as he met with Saudi Crown Prince Mohammed bin Salman, who announced a $1 trillion investment pledge in the U.S. during the same forum. Trump, however, pivoted to domestic economic issues, targeting the Fed's recent decision to maintain elevated interest rates. "The rates are too high," he said, accusing Powell of squandering $4 billion on a "tiny building" for the Fed's headquarters. Trump also reiterated his demand for rate cuts, arguing that high borrowing costs exacerbate the cost-of-living crisis for Americans. "Mortgages and auto loans are too expensive," he added, linking the Fed's policies to broader economic frustrations.

Bessent, a former hedge fund executive and Trump's Treasury Secretary, has been a key figure in the administration's efforts to curb inflation. According to Bessent, Trump's proposed $2,000 tariff rebate checks to Americans would require congressional legislation, hedging on the feasibility of the plan while praising the president's "solutions" to affordability issues. The Treasury Secretary also highlighted Trump's recent executive order eliminating tariffs on over 200 imported food items, including coffee and bananas, as part of a broader strategy to lower consumer prices.

Trump's remarks at the forum followed a contentious week in his administration. The president has repeatedly called Powell "stupid" and "too late Powell," pressuring him to cut rates amid declining approval ratings for his economic policies. Trump's public confrontation with the Fed chair marks a rare moment of openness about his desire to replace him, despite previous claims that "people are holding me back" from acting. The Federal Reserve, which has maintained a cautious approach to rate cuts, has yet to respond to Trump's latest threats.

The administration's economic agenda has faced challenges beyond the Fed. Trump's proposal for $2,000 tariff dividend checks, while popular with some voters, remains stalled without congressional support. Meanwhile, the president's efforts to lower healthcare costs and expand tax cuts for working families are expected to gain momentum in the coming weeks, according to a senior White House official.

As Trump continues to frame his economic policies as a response to inflation and affordability concerns, his public clashes with the Fed highlight the tension between political leadership and independent monetary policy. With the 2026 midterms approaching, the administration's ability to deliver on these promises could shape the trajectory of its economic agenda-and the Fed's independence.