Trump Demands Powell Resign Over High Interest Rates

Donald Trump has reignited his feud with the Federal Reserve, publicly calling for Chair Jerome Powell to “resign immediately.” This demand comes amidst scrutiny over the Fed’s headquarters renovation and accusations of deceptive testimony by Powell. Trump’s post on Truth Social labeled Powell as “Too Late,” criticizing what he perceives as the Fed’s delayed response to economic needs.

The core of Trump’s dissatisfaction is the Fed’s decision to keep interest rates high, currently ranging between 4.25% and 4.5%. Trump has advocated for significant cuts, potentially down to 1%, asserting that the current rates are detrimental to the economy and costing the U.S. a substantial amount. This stance is not new for Trump, who has consistently pushed for a more accommodative monetary policy.

In response, Jerome Powell defended the Fed’s actions, attributing the cautious approach to inflation driven by tariffs implemented during Trump’s presidency. Speaking at a forum, Powell explained that the Fed paused rate cuts to evaluate the impact of inflation. He stressed that the central bank’s focus remains on economic data rather than political pressure.

Although Trump cannot directly remove Powell without cause, there are indications that he is preparing to replace him early if re-elected. Names like Christopher Waller and Kevin Warsh have been mentioned as potential successors. Analysts caution that such moves could undermine confidence in the Fed’s independence and disrupt financial markets.

The ongoing dispute between Trump and Powell underscores the broader political and market implications of turmoil within the Fed. The situation highlights the tension between the executive branch and the central bank, with Trump’s demand for Powell’s resignation adding complexity to their relationship. The potential for early replacement of the Fed chair raises concerns about the independence of the central bank and its ability to make decisions based on economic data rather than political influence.