Trump Criticizes Fed’s Powell Over Interest Rate Policy

Former US President Donald Trump has once again voiced his disapproval of Federal Reserve Chairman Jerome Powell’s handling of interest rates, asserting that Powell is “always TOO LATE AND WRONG.”

In a post on his Truth Social platform, Trump stated, “Powell’s termination cannot come fast enough,” adding that the Fed should have reduced rates earlier, similar to the European Central Bank (ECB), and should definitely implement cuts now.

Powell had previously cautioned that Trump’s extensive tariffs on numerous trade partners could create a challenging situation for the Fed, potentially forcing a choice between managing inflation and addressing unemployment.

The former president’s unpredictable tariff policies have reportedly caused apprehension among investors and trade partners, leading to uncertainty regarding his long-term strategy and its potential impact on global commerce.

Trump has consistently pressed Powell to lower interest rates, but the US central bank has maintained a cautious approach, keeping rates in the 4.25 to 4.5 percent range since the beginning of the year.

The Republican leader has frequently targeted the Fed chairman with criticism, even though he was the one who initially nominated Powell during his presidential tenure. Trump has accused Powell of engaging in political maneuvers while leading the independent central bank.

Powell has indicated that the Fed is adopting a wait-and-see stance as markets evaluate shifts in policy.

During a campaign event in August, Trump suggested that the White House should have influence over monetary policy decisions, raising concerns about the central bank’s independence.

While the US president lacks the direct authority to dismiss Federal Reserve governors, Trump could initiate a drawn-out process to remove Powell by demonstrating “cause” for such action.

Powell’s Commitment to Serve

Although disagreements between presidents and Fed leaders have a lengthy history, any effort to compel Powell’s departure would be unprecedented in modern American political history.

On April 4, Powell affirmed his intention to complete his term as Fed chairman, which concludes next year.

He stated at an event in Virginia, “I fully intend to serve all of my term.”
Powell also hinted that the Fed was in no hurry to decrease its benchmark lending rate from its present elevated level.

According to data from CME Group, financial markets anticipate a roughly two-thirds likelihood that policymakers will decide to maintain rates steady at the upcoming Fed interest rate meeting in May.

Adjusting key interest rates is a primary tool the Fed uses to fulfill its dual mandate of controlling inflation and unemployment.

Reducing interest rates typically stimulates economic activity by making borrowing more affordable and encouraging investment. Conversely, raising rates or maintaining them at higher levels can help curb inflation.

US year-on-year consumer inflation decreased to 2.4 percent in March, moving closer to the Fed’s long-term target of two percent.

This decrease was partly attributed to a 6.3 percent drop in gasoline prices, based on official data.