President Trump lashed out Thursday at Fed chair Jerome Powell over his reluctance to lower interest rates to juice the sputtering economy.
Trump said Powell should be ousted because he is acting “too late” to reduce lending costs, which Trump believes could keep the American economy humming even as he imposes massive new tariffs on imported goods.
“Powell’s termination cannot come fast enough,” Trump wrote on his social media site.
Trump’s outburst was triggered by Powell’s speech Wednesday in which he warned that Trump’s on-again, off-again trade war would likely cause higher inflation and lower growth.
“Powell of the Fed, who is always too late and wrong, yesterday issued a report which was another, and typical, complete “mess!” Trump wrote. “(He) should have lowered interest rates …long ago, but he should certainly lower them now.”
The Fed lowered its main lending rate several times late last year as the inflation rate dipped toward the central bank’s target of 2%. But the central bank has put off further easing as inflation has proven more stubborn than expected.
Tariffs will increase prices and therefore put upward pressure on inflation, while potentially reducing growth and increasing unemployment.
Powell told he Economic Club of Chicago that Trump’s aggressive and haphazard tariff proposals have left the Fed seeking “greater clarity” on the impact of policy changes in areas such as immigration, taxation, regulation and tariffs before making the move on interest rates.
Powell stressed that the Fed would never bow to “any political pressure.”
“People can say whatever they want. That’s fine,” Powell said. “But we will do what we do strictly without consideration of political or any other extraneous factors.”
The renewed feud between the two leaders could spook global markets already worried about Trump’s on-again, off-again campaign to impose sky-high tariffs on imported goods.
Trump has hinted before at hoping to fire Powell, whose term does not expire until next year.
Powell was initially nominated by Trump in 2017, and he was appointed to another four-year term by President Joe Biden in 2022.
Powell has vowed not to step down if Trump asked him to resign, noting that the removal or demotion of top Fed officials is “not permitted under the law.”
The Fed started Trump’s second term in a relatively secure spot with low unemployment and declining inflation. But the still-spreading trade war has put Powell in a tough spot because the bank’s mandate is to simultaneously stabilize prices and maximize employment.
