Trump Takes Aim at Powell: Fed Maintains Rate Amidst Political Turmoil
Federal Reserve Keeps Interest Rate Steady - President Trump Criticizes Fed Chair Powell as 'Unintelligent' - Federal Reserve does not adjust interest rates - Trump criticizes Fed Chair Powell as "unintelligent"
In a typical power play, the Fed has kept interest rates unchanged after a two-day meeting, despite pressure from President Trump for a rate cut. Uncertainty about the economy's future has lessened slightly, but it still hovers high, according to the Fed statement.
Fed Chairman Jerome Powell addressed reporters, stating that the central bank foresees Trump's tariffs dousing the economic growth and boosting consumer prices, although the full brunt of these measures has yet to manifest in the pockets of American consumers. Powell emphasized that the effects of tariffs take time to trickle through the supply chain and culminate in increased consumer prices.
President Trump has been vocal about his disdain for Powell, labeling him as a "stupid" individual unwilling to acquiesce to his demands for lower interest rates. Trump proclaimed, "We have zero inflation, only success, and I'd like to see interest rates slashed." He believes that slashed rates would lead to higher investments and boost economic growth.
Trump has been putting pressure on Powell for months, even going as far as threatening to dismiss him. Consequently, questions about the Fed's independence have arisen, as it is a crucial component of its functioning.
In-Depth Insights
Trump's relentless pressure on Powell for lowering interest rates has been a focal point of public debate. During his second term, Trump sought lower rates either to preserve economic momentum before elections or to gain an edge in political contests. Trump publicly lambasted Powell on social media, labeling him as one of the "dumbest and most damaging" individuals in government, and even hinted at the possibility of firing him due to the Fed's reluctance to cut rates.[1][4]
Powell's staunch commitment to the Fed's independence was underscored when he met with Trump at the White House in late 2025. He emphasized that the Fed's monetary policy decisions would be based solely on incoming economic data and objective, non-political analysis. This stance aimed to strengthen the Fed's role as a technocratic institution separated from political influence, despite Trump's continuous criticism and attempts to sway policy.[2][4]
The consequences of Trump's public attacks on Powell and his calls for rate cuts led to market volatility, with currency and government debt yield fluctuations.[4] However, legal rulings confirmed Powell's untouchable status in terms of removal by the president, further safeguarding the Fed's autonomous operations.[4] Powell has managed to maintain a disciplined communication strategy, focusing on data and economic fundamentals, while largely shrugging off the political pressure from Trump.[3]
The Big Picture
- Trump has been pressuring Powell for a rate cut while publicly berating him.
- Powell's insistence on the Fed's independence and data-driven policy has been Powell's response to the pressure.
- The Fed maintained its interest rates in the face of presidential pressure, favoring careful economic analysis over political considerations.
- Trump's confrontations with Powell strained public faith in the Fed's ability to make independent monetary policy decisions, but did not deter the Fed from adhering to its mandate.[1][2][4]
- Amidst Trump's persistent pressure for lower interest rates and public berating of Powell, the Fed, led by Jerome Powell, upheld its decision to keep the interest rates unchanged.
- Despite the political turmoil in Washington, the Fed's policy-and-legislation focused on data-driven analysis, remaining independent from political influence in setting interest rates.
- As the US President Donald Trump continued to label Federal Reserve Chairman Jerome Powell as "stupid" for not complying with his demand for lower interest rates, concerns about the Fed's independence arose in the general-news sphere.
