Trump Pressures Powell for Rate Cuts Amid Inflation Concerns

US President Donald Trump has expressed frustration with Federal Reserve Chairman Jerome Powell’s resistance to cutting interest rates, a stance that could have significant implications for the financial markets. Trump has repeatedly called for lower interest rates, arguing that they would stimulate economic growth, boost business investments, and create jobs. He also believes that the US needs competitive rates in line with other major economies.

However, Powell has maintained a “wait-before-act” stance, despite mounting political pressure. The current federal interest rate stands at 4.25%-4.50%, and no cuts have been made since December 2024. The Fed’s reluctance to cut rates is due to concerns about inflation, which rose to 2.4% in May 2025, breaking a four-month downtrend. Additionally, the labor market remains strong, with jobless claims dropping from 246K to 236K, signaling economic resilience. The Fed argues that rate cuts right now could overheat the economy and fuel inflation, risking long-term instability.

Trump’s dissatisfaction with Powell has led to speculation that he may replace the Fed chair. Trump cannot directly fire the Fed Chair, whose term ends in May 2026, but he has publicly demanded Powell’s resignation. Kevin Warsh, a former Fed governor and known policy dove, is rumored to be Trump’s preferred replacement for someone more aligned with his views on rate cuts. A change in leadership could reshape Fed policy, possibly triggering major financial shifts.

Trump’s push for lower interest rates could have significant implications for the crypto market. Lower rates would mean cheaper money, potentially driving more capital into risk-on assets like Bitcoin and altcoins. If inflation spikes, Bitcoin could act as a hedge, strengthening its narrative as digital gold. A dovish Fed could increase liquidity, pushing crypto prices higher. However, the power struggle between Trump and the Fed may also lead to short-term volatility and investor uncertainty.

Trump’s aggressive push for rate cuts and potential reshaping of the Federal Reserve could create the perfect setup for a crypto rally, but not without turbulence. If Powell stays firm, rate cuts may come slowly. But if Trump replaces him with someone more dovish, expect faster policy shifts and possibly a surge in crypto investor confidence. The situation remains fluid, with Trump continuing to criticize Powell and suggest that he should resign. The president's actions have raised questions about the future of monetary policy in the United States and the role of the Federal Reserve in shaping economic outcomes. As the situation develops, it will be important to monitor the impact of Trump's actions on the economy and financial markets.