Trump Pressures Fed After Rate Hike Hold Amid Resignation Vacancy

Trump’s recent criticism of Federal Reserve Chair Jerome Powell intensified following the Fed’s decision to maintain interest rates unchanged in a 4.25% to 4.5% range. The president, frustrated by the policy stance, called for the Fed board to “assume control” if Powell does not “substantially” lower rates [1]. This rhetoric came hours after Fed Governor Adriana Kugler announced her resignation ahead of schedule, creating an immediate vacancy on the board and offering Trump an opportunity to install a more dovish appointee [2]. Kugler, who served on the board since 2021, is expected to return to Georgetown University as a professor [1].

Trump’s demands for rate cuts have become a consistent theme in his public remarks, with the president frequently labeling Powell a “stubborn moron” and accusing him of ignoring the needs of the American economy [3]. The president has specifically called for a three-point reduction in the benchmark interest rate, arguing it would lower inflation and stimulate growth [7]. However, Fed officials have emphasized that policy decisions are data-driven and require careful evaluation of economic indicators such as employment and inflation.

Recent economic data has added complexity to the Fed’s decision-making process. The July jobs report showed a weak 73,000 jobs added, with prior months’ figures revised downward, signaling possible softening in the labor market [7]. Despite this, Powell has maintained that current rates remain appropriate, noting that “the economy is not performing as though restrictive policy is holding it back inappropriately.” His comments during the post-meeting press conference were described as cautious and non-committal, effectively dashing investor hopes for an immediate rate cut in September [1].

The Fed’s independence, however, remains a key factor in its ability to resist political pressure. While Trump has threatened to remove Powell and replace him, legal and institutional safeguards protect the chair from being fired over policy disagreements [10]. Additionally, Powell can continue serving as a Fed governor beyond his chairmanship, which expires in May 2026, potentially limiting Trump’s ability to gain a majority on the board [1].

Economists argue that a Trump-led revolt against Powell is unlikely, as a majority of the board would need to oppose him to override his position in the FOMC’s voting process [1]. While two Trump appointees, Christopher Waller and Michelle Bowman, dissented during the latest rate decision, their votes were not enough to challenge the majority stance. Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors, noted that a successful revolt would require at least seven votes against Powell, a scenario he described as improbable unless economic data deteriorates significantly [1].

Trump’s influence over the Fed is further complicated by the broader economic landscape. Despite his calls for aggressive rate cuts, the U.S. economy remains resilient, with inflation still above the 2% target and consumer spending continuing to hold up. Powell has consistently maintained that policy decisions must be based on economic realities rather than political pressure, a stance that aligns with the Fed’s long-standing commitment to independence [9].

Sources:

[1] Federal Reserve vacancy interest rates Donald Trump Jerome Powell

https://fortune.com/2025/08/02/federal-reserve-vacancy-interest-rates-donald-trump-jerome-powell/

[2] Trump slams Powell, calls for Federal Reserve board to

https://journalrecord.com/2025/08/01/trump-urges-fed-governors-override/

[3] Trump calls Powell 'stubborn moron' over Fed interest rate

https://www.foxbusiness.com/politics/trump-slams-powell-moron-calls-feds-board-take-control-policy-moves

[7] Live Updates: After a Weak Jobs Report, Trump Says He's

https://www.nytimes.com/live/2025/07/31/business/tariffs-trump-trade/fed-governor-steps-down-early-giving-trump-opportunity-to-appoint-new-official

[9] Trump calls Powell a 'stubborn moron' and urges Fed

https://weartv.com/news/nation-world/president-trump-calls-jerome-powell-a-stubborn-moron-and-urges-federal-reserve-board-to-seize-control-of-central-bank-interest-rates-inflation-tariffs-consumers-economy-job-report

[10] Trump ramps up Jerome Powell attacks

https://www.facebook.com/NYPost/posts/president-trump-on-friday-called-on-the-federal-reserve-board-to-assume-control-/1160178****07500/