Trump reiterates criticisms against Powell following Federal Reserve's decision
In a recent development, two Federal Reserve governors appointed by US President Donald Trump dissented in a rate-cutting vote, marking the first time in 30 years that such an event has occurred [1]. This dissenting vote could potentially escalate the ongoing dispute between Trump and the Federal Reserve, which has been ongoing for some time.
The dissent occurred on Wednesday, adding to the ongoing tension. Trump has been repeatedly calling for Federal Reserve chair Jerome Powell to step down due to his dissatisfaction with the Fed's decision not to lower interest rates [2]. In a post on Truth Social, Trump called Powell a "total loser" and stated that he is "too angry, too stupid & too political" to hold the role of Fed chair [3].
Despite Trump's criticism, the Federal Reserve has refused to bow to the White House pressure to lower interest rates. Fed officials and most economists maintain that keeping interest rates relatively high is necessary to prevent economic overheating and control inflation, which currently exceeds the Fed's 2% target [1].
The dissenting vote could have implications for the future of monetary policy in the US. It could also fuel concerns over the continued independence of the Federal Reserve, an issue that has been a topic of debate for some time. Prominent financial leaders like JPMorgan Chase CEO Jamie Dimon have publicly supported Powell, emphasizing that political interference in the Federal Reserve would be counterproductive [4].
Trump believes that the Fed's decision to keep rates steady is costing the US government billions in unnecessary borrowing costs. However, the Federal Reserve's independence, protected by law and the Supreme Court, ensures that its decisions are based on economic factors rather than political pressure [1].
In summary, while Trump's public criticism underscores political tension surrounding monetary policy, it has not led to any erosion of the Federal Reserve's legal or operational independence from the executive branch [1][4]. The ongoing dispute between Trump and the Federal Reserve continues to be a significant development in US economic policy.
[1] - Source: The Wall Street Journal [2] - Source: CNBC [3] - Source: CNN [4] - Source: Bloomberg
The ongoing dispute between Trump and the Federal Reserve, concerning monetary policy and interest rates, could influence future policy-and-legislation in the US. This disagreement has also sparked concerns about the continued independence of the Federal Reserve, a topic of debate in politics and general-news.
