Trump Blasts Powell Over High Interest Rates, Calls for Immediate Cuts

President Donald Trump, in a series of posts on Truth Social, launched a scathing critique of Jerome Powell, the head of the Federal Reserve, just five months after returning to the White House. Trump expressed deep regret for appointing Powell to the position, asserting that Powell's high-interest rate policies have cost the United States up to $1 trillion annually. He blamed Powell for the economic challenges faced by the country and suggested that Powell should immediately reduce interest rates to between 1% and 2% to save the nation significant amounts in interest payments.

Trump's criticism of Powell was not limited to economic policies. He described Powell as a "dumb guy" and an "obvious Trump Hater," claiming that he had tried various approaches to influence Powell but only being "nasty" got his attention. Trump also criticized President Biden for retaining Powell in his position, stating that inflation is no longer a concern and that the economy is growing rapidly with new factories opening and tariffs bringing in strong revenue. He urged the Federal Reserve to take advantage of the current economic conditions and lower interest rates.

Trump's rant concluded with a harsh assessment of Powell, calling him a "total and complete moron" and suggesting that the Federal Reserve Board should override him. He also hinted at the possibility of firing Powell, stating that Powell's term is ending soon. This outburst came just hours before Powell and other Fed officials spoke publicly for the first time since holding interest rates steady this week. The Fed decided to keep rates between 4.25% and 4.5% for now, with policymakers divided on the next steps. Some believe inflation is still too high, while others advocate for cutting rates soon.

Christopher Waller, a Fed Governor, expressed his belief that inflation is not a real threat at the moment and that the Fed should proceed with rate cuts as early as next month. He pointed to recent data showing positive trends in inflation and argued that rising tariffs would not create serious inflation. Waller also highlighted signs of stress in the labor market, such as high unemployment among recent college graduates, and suggested that the Fed should consider cutting the policy rate at the next meeting.

Mary Daly, who runs the San Francisco Fed, offered a more balanced perspective. She suggested that a rate cut in the fall might be appropriate but not in July. Daly warned against rushing into cuts without solid data but acknowledged that the economy is cooling. She also noted that tariffs could push up costs, but businesses might absorb the hit instead of passing it to buyers. Daly's comments reflect a cautious approach, emphasizing the need for solid data before making significant policy changes.

The latest projections from the Fed show a near 50-50 split among officials. Eight expect two rate cuts this year, while seven think there should be none. Those expecting cuts believe the September and December meetings could be the moments to act, while the rest want to keep things where they are. This division highlights the ongoing debate within the Fed on the appropriate course of action in response to current economic conditions.