Powell Defies Trump Pressure, Keeps Rates Steady Amid Rising Inflation

Federal Reserve Chair Jerome Powell has publicly and privately reaffirmed his commitment to his role and monetary policy decisions, refusing to resign or cut interest rates despite escalating pressure from President Donald Trump. The standoff has become a focal point of tensions between the White House and the central bank, with Trump launching a sustained campaign of public criticism and unverified claims against Powell. According to sources familiar with the situation, Powell has emphasized that stepping down would undermine the Federal Reserve’s independence, a principle he views as critical to its institutional integrity [1].

Trump’s pressure tactics have included daily public attacks, labeling Powell “stupid” and “a numbskull,” while criticizing the Fed’s decision to maintain current interest rates. The president has also targeted a $2.5 billion Fed construction project, questioning its cost overruns and implying it could justify termination [2]. These efforts were amplified by members of Trump’s inner circle, who spread unverified rumors about Powell preparing to resign. The president’s direct confrontation reached a peak when he toured the Federal Reserve headquarters, where Powell personally guided him through the facility. Trump reportedly joked about wanting lower rates, but Powell remained unresponsive to the political pressure [3].

Powell’s resistance reflects a broader commitment to data-driven decision-making. Sources close to the Fed note that policy choices, including maintaining the current rate, are based on economic indicators rather than political considerations. This approach has drawn ire from Trump, who argues that rate cuts are necessary to counter inflation and support his economic agenda. The president has criticized the Fed for allegedly prioritizing political opponents over domestic industries, despite the central bank’s focus on its dual mandate of maximum employment and stable prices [4].

The Fed’s caution on rate cuts is tied to recent economic data showing an uptick in inflation. Officials have stated they will wait for clearer evidence of cooling price pressures before adjusting policy, a stance that clashes with Trump’s calls for immediate action. Analysts highlight that Powell’s refusal to yield reinforces the central bank’s institutional resilience but risks escalating political conflict as the 2026 election approaches [5].

The situation underscores the delicate balance between executive influence and central bank independence. While Trump has not yet followed through on threats to fire Powell, his aggressive rhetoric signals a willingness to challenge the Fed’s autonomy. Powell’s insistence on serving his full term until May 2026 ensures he will remain a political target until his tenure ends. For now, his resolve appears unshaken, but the prolonged tension raises questions about the future of U.S. monetary policy under increasingly polarized governance [6].

Sources:

[1] [Fed's Powell Vows to Resist Trump's Pressure to Resign](https://finance.yahoo.com/news/fed-powell-vows-resist-trump-132340694.html)

[2] [Fed Chair Shares Plan to Spite Trump After Brutally Fact](https://www.yahoo.com/news/articles/fed-chair-shares-plan-spite-153919235.html)

[3] [Fed Chair Jerome Powell Refuses to Resign or Cut Rates](https://www.mitrade.com/insights/news/live-news/article-3-988718-20250726)

[4] [What Is Powell Saying Amid Trump's Pressure to Resign?](https://www.economies.com/forex/news/what-is-powell-saying-amid-trumps-pressure-to-resign%20-46959)

[5] [The Fed Renovations Fueling Trump's Anger at Jerome](https://www.nytimes.com/2025/07/24/business/trump-federal-reserve-renovations-powell.html)

[6] [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)