President Trump on Thursday told the Federal Reserve to cut interest rates and even called for the “termination” of Chair Jerome Powell.
Mr. Trump, writing on Truth Social, pointed to the European Central Bank, which cut interest rates this week in an attempt to spur growth.
The president has leaned on the U.S. central bank to cut rates in the past. But now, he is explicitly calling for Mr. Powell’s firing.
“Powell’s termination cannot come fast enough!” he wrote on Truth Social.
The Fed is taking a cautious approach to cutting rates given its task of controlling inflation.
On Wednesday, Mr. Powell told the Economic Club of Chicago that Mr. Trump’s sweeping tariff plan could put the Fed in a difficult position.
SEE ALSO: European Central Bank cuts interest rates for the seventh time
The central bank could be caught between controlling inflation and spurring economic growth due to tariffs and other economic policies.
“If that were to occur, we would consider how far the economy is from each goal, and the potentially different time horizons over which those respective gaps would be anticipated to close,” Mr. Powell said.
In April, the president urged the Fed to lower interest rates to ease the economy’s transition under his sweeping tariff plan, which imposed a blanket tariff on all imports.
Mr. Trump said Mr. Powell is “too late and wrong” when it comes to cutting interest rates.
“He should certainly lower them now,” Mr. Trump said.
Mr. Powell’s term lasts until May 2026. He was promoted to the chair position by Mr. Trump during his first term and was given a second term by President Biden.
Mr. Trump is leaning on the Fed while he pushes an aggressive trade agenda featuring a blanket 10% tariff on all imports and crippling levies on Chinese imports.
The president granted a 90-day pause on hefty, reciprocal tariffs against dozens of other countries because of turmoil in the markets, particularly higher yields for Treasury bonds.
The White House said the pause will give space for productive negotiations on lowering trade barriers to U.S. goods.
“Had a very productive call with the President of Mexico yesterday. Likewise, I met with the highest level Japanese Trade Representatives. It was a very productive meeting,” Mr. Trump wrote in a separate Truth Social post. “Every Nation, including China, wants to meet! Today, Italy!”
The Fed is considered an independent body that makes economic decisions outside the whims of presidents.
However, the Supreme Court is set to take up a case that could make it easier for presidents to fire commissioners of independent agencies.
“I don’t think that that decision will apply to the Fed, but I don’t know. It’s a situation that we’re monitoring carefully,” Mr. Powell said Wednesday. “Generally speaking, Fed independence is very widely understood and supported in Washington, in Congress, where it really matters.”
Mr. Trump spent a good chunk of his first term berating the Fed, calling them “boneheads.”
Francesco Bianchi, an economics professor at Johns Hopkins University, said the situation then “was quite different, with inflation below target.”
“Now, inflation is above target and there is risk of additional inflationary pressure coming from tariffs and a large fiscal imbalance,” he said. “This request for lower rates could backfire if markets perceive that going forward the Fed will be less committed to low and stable inflation. This could create additional inflationary pressure and an increase in long-term interest rates as markets price in higher expected inflation and higher risk of inflation volatility.”
