Trump Intensifies Attack on Powell Over Interest Rates

President Donald Trump has intensified his public dispute with Federal Reserve Chair Jerome Powell, labeling him a “numbskull” while affirming that he will not dismiss the central bank chief despite growing frustration over the Fed’s reluctance to reduce interest rates.

During a White House event on Thursday, Trump delivered his most severe criticism of Powell’s monetary policy approach, asserting that lowering rates by one percentage point could save the United States $300 billion annually, while a two-point reduction would generate $600 billion in savings.

This verbal attack marks the third time in two days that Trump’s administration has publicly targeted Powell. It follows similar criticisms from Commerce Secretary Howard Lutnick and Vice President JD Vance, who described the Fed’s stance as “monetary malpractice.”

The coordinated pressure campaign from the administration reflects growing impatience with the central bank’s independence, particularly as Trump faces re-election pressures and seeks to demonstrate economic leadership. Despite repeatedly calling Powell “Too Late” and questioning why firing him would be controversial, Trump stopped short of threatening termination, instead suggesting he “may have to force something” if rate cuts don’t materialize soon.

The timing of Trump’s criticism appears strategic, coming as recent economic indicators show inflation cooling and energy prices declining due to increased domestic drilling under his “drill, baby, drill” energy policy. Powell’s current term as Fed chair expires in May 2026, and Trump has hinted that an announcement regarding his nominee for the next Fed chair could come soon.

Harvard legal experts suggest that while Trump may have constitutional authority to remove Powell, such a move would likely trigger severe market volatility and undermine the Fed’s credibility as an inflation fighter, potentially causing long-term interest rates to spike even if short-term rates were cut.

The escalating confrontation between Trump and Powell is a fundamental clash over Federal Reserve independence with deep constitutional and economic implications. Trump’s frustration stems from his belief that the current interest rate environment unnecessarily burdens federal borrowing costs, particularly as the government faces mounting short-term debt obligations.

The president argued that Europe has implemented ten rate cuts while the Fed has delivered none, despite similar economic conditions and falling inflation metrics. Legal scholars say that while the Federal Reserve Act of 1913 allows governors to be removed “for cause,” the Supreme Court’s recent decisions have gradually eroded the traditional “for cause” protections that independent agencies have enjoyed for 85 years.

Harvard Law School’s Daniel Tarullo, a former Fed Board member, suggests that three conservative justices have hinted at potentially treating the Federal Reserve differently from other agencies, possibly creating a carve-out based on the central bank’s historical precedent dating back to the First and Second Banks of the United States.

However, market dynamics may provide Powell with more protection than legal statutes, as any attempt to remove the Fed chair would likely trigger immediate and severe market reactions that would prove counterproductive to Trump’s economic objectives. The anticipated market volatility is a powerful disincentive, particularly given that Treasury Secretary Scott Bessent has focused on maintaining stable 10-year Treasury rates, which are key for economic investment decisions.

Recent economic indicators have strengthened Trump’s argument for immediate monetary easing. Inflation data show continued price stability and energy costs declining due to expanded domestic oil production. The favorable Producer Price Index reading in May has calmed fears about tariff-induced inflation spikes, emboldening the administration to intensify pressure on the Fed while markets increasingly price in potential rate cuts later this year.