Former President Trump released another tirade against Fed Chair Jerome Powell, demanding his immediate removal over stubbornly high interest rates sitting at 4.25%-4.50%. Trump accused Powell of playing politics with monetary policy, positioning it as a key campaign issue for 2024. The attacks come as the Fed maintains tight policy despite lower growth projections, raising questions about central bank independence. The brewing conflict between political pressure and monetary policy sets up quite the economic showdown.
Former President Donald Trump released another blistering attack on Federal Reserve Chairman Jerome Powell, as the central bank keeps interest rates stubbornly high at 4.25%-4.50%.
Trump’s latest tirade comes as Powell and the Fed signal just two measly rate cuts for 2025, totaling a mere 50 basis points. Not exactly the aggressive easing some were hoping for. The former president didn’t mince words, demanding Powell’s immediate removal and accusing him of playing politics with monetary policy.
The timing couldn’t be more contentious. The Fed just revised down its GDP growth projections for 2025 to 1.7% from 2.1%, while core inflation forecasts actually ticked up. Consumer spending is taking hits from those sky-high rates, and Americans’ savings are dwindling. But Powell? He’s sticking to his guns. With unemployment projected at 4.4 percent for 2025, the economic outlook remains uncertain.
Markets are in a wait-and-see mode, expecting rates to stay put at least through mid-2025. Morningstar’s crystal ball shows three rate cuts coming this year, but that’s still not enough to satisfy Trump’s appetite for easier money. The former president insists Powell’s stubbornness is crushing economic growth and recovery efforts. The Fed’s core consumer prices have moderated to a 2.6% year-over-year increase in January 2025.
The political temperature is rising fast. Trump’s attacks on Powell have turned monetary policy into prime campaign fodder for 2024-2025. Some economists think the Fed might actually cut rates to 2.25%-2.50% by 2027, but that’s cold comfort for Trump, who wants action now.
Meanwhile, Powell’s team is trying to thread the needle. They’re slowing their balance sheet reduction, dropping the Treasury securities redemption cap from $25 billion to $5 billion in April.
But with persistent inflation concerns and new worries about tariffs pushing prices higher, the Fed chief isn’t backing down.
The whole mess has sparked fresh debate about central bank independence. But Powell seems determined to hit that 2% inflation target, no matter how many angry tweets come his way. Talk about a high-stakes game of monetary chicken.
