Trump Pressures Fed for Rate Cut Amid Rising Core Inflation of 3.1%

U.S. President Donald Trump has intensified his calls for the Federal Reserve to lower interest rates following the release of the latest inflation report, which showed core prices rising to 3.1% in July while overall inflation remained steady at 2.7% [2]. In a series of public remarks and social media posts, Trump criticized Federal Reserve Chair Jerome Powell, labeling him “complacent” and urging an immediate rate cut to stimulate economic growth [7]. He also referenced a “major lawsuit” he claims is being prepared against Powell over the Fed’s management and renovation practices, suggesting broader dissatisfaction with the central bank’s leadership [1].

Despite the pressure from the , the Fed has maintained a cautious and data-driven stance. Powell has emphasized that rate decisions will depend on inflation and employment data, with no official signals of a rate cut communicated so far [5]. The central bank is expected to closely evaluate economic indicators before making any policy adjustments, particularly as rising core inflation could limit the Fed’s room to act [8].

Market expectations, however, have shifted in favor of a rate cut, with investors increasingly pricing in the possibility of a September reduction. This shift is partly driven by concerns over the labor market and the impact of Trump’s recent tariff policies on economic growth [6]. Analysts are divided on the potential effects of a rate cut, with some suggesting that lower borrowing costs could help offset the drag from tariffs, while others warn that premature action might worsen inflation [9].

Trump’s comments have also drawn attention to broader political dynamics surrounding the Fed’s independence and its role in shaping economic policy. The president has framed the Fed’s current stance as politically influenced, arguing that the central bank is too slow to respond to economic conditions that, in his view, justify immediate action [1]. His recent appointment of a new leader for the Bureau of Labor Statistics has further fueled speculation about potential efforts to influence economic reporting and policy narratives [3].

As the September Federal Open Market Committee meeting approaches, the Fed will need to carefully balance the risks of high inflation with the growing political and market pressures for rate cuts. While Trump’s demands are not binding, they reflect a broader expectation for accommodative monetary policy and could influence market sentiment in the coming months [5]. The central bank’s response will be closely watched by investors, who are already factoring in the potential for a shift in financial conditions [4].

Source: [1] Trump cites 'major lawsuit' against Fed's Powell, again urges rate cuts (https://finance.yahoo.com/news/trump-cites-major-lawsuit-against-140231670.html)

[2] Inflation report: July unchanged; Trump tells Powell lower rates now (https://www.fox6now.com/news/cpi-inflation-report-july-tariffs-grocery-gas-prices-2025)

[3] Dow, S&P 500, Nasdaq rise as Fed rate cut bets jump after inflation report (https://finance.yahoo.com/news/live/stock-market-today-dow-sp-500-nasdaq-rise-as-fed-rate-cut-bets-jump-after-cpi-inflation-report-234425698.html)

[4] Jerome Powell's job just got a whole lot easier as inflation cools (https://fortune.com/2025/08/12/jerome-powell-fed-rate-cut-july-cpi-inflation-unemployment/)

[5] Jobs data triggered Trump, but Fed officials saw it not as rigged reason to cut (https://www.reuters.com/business/jobs-data-triggered-trump-fed-officials-saw-it-not-rigged-reason-cut-2025-08-12/)

[6] US inflation unchanged last month, though core prices rose (https://www.ksn.com/news/business/ap-inflation-likely-moved-higher-last-month-as-tariffs-bite-putting-the-fed-in-bind/)

[7] Trump considers 'major lawsuit' against Powell over renovations, again urges rate cut (https://www.scmp.com/news/world/united-states-canada/article/3321629/trump-considers-major-lawsuit-against-powell-over-renovations-again-urges-rate-cut)

[8] CPI report: July inflation unchanged, tariff impacts still loom (https://www.livenowfox.com/news/cpi-inflation-report-july-tariffs-grocery-gas-prices-2025)

[9] Trump Slams Powell, Defends Tariffs As Economists Eye Inflation Report (https://www.benzinga.com/analyst-stock-ratings/analyst-color/25/08/47063958/trump-powell-fed-july)