Trump urges the Federal Reserve Board to seize command over the central bank, Absolutely dismantling Powell's authority.
In the turbulent world of American politics and economics, the power dynamic between President Donald Trump and Federal Reserve Chair Jerome Powell has been a source of intrigue. This relationship, marked by Trump's persistent public criticism and pressure on Powell to cut interest rates, and Powell's steadfast defence of the Federal Reserve's independence and cautious policy stance, evolved into a tense and confrontational one.
Trump's attacks on Powell reached a crescendo in mid-2025, with the President publicly demanding aggressive interest rate cuts to stimulate the economy. Trump's criticism was particularly directed at Powell's reluctance to lower rates quickly, despite economic data suggesting slower growth or risks. Trump even went so far as to call Powell "Mr. Too Late" and to advocate for a 3 percentage point reduction in the Fed's benchmark rate[1][2].
Despite Trump's threats and critiques, he never directly fired Powell. Legal and institutional constraints prevented the President from removing the Fed chair simply over disagreements on policy. Powell consistently defended the Fed's actions, emphasizing data-driven decisions, and resisted political pressure to change monetary policy for short-term political gain[1].
The July jobs report showed a significant decrease, with only 73,000 jobs added, a stark contrast to previous months[3]. This economic data, along with Trump's tariffs, became a point of contention between the two. Powell stated that Fed officials needed to see the impact of Trump's tariffs on inflation before making a decision about interest rates[4].
The Supreme Court has suggested that Trump cannot remove Powell for policy disagreements[5]. However, Powell's term as chair ends in May 2026, allowing Trump to appoint a new chair with Senate confirmation. Two of the seven Fed governors, Christopher Waller and Michelle Bowman, have pushed for slight rate cuts, albeit not as drastic as Trump's demands[2].
Trump welcomed the arguments and strong dissents of Waller and Bowman, despite previously nominating them[2]. Waller and Bowman see the tariffs as having a one-time impact on prices and the job market as softening[6]. The Fed, as the institution responsible for stabilizing prices and maximizing employment, continues to navigate this complex economic landscape, with the future of monetary policy still uncertain.
References:
- Trump and Powell's confrontational relationship over interest rates
- Trump's calls for aggressive rate cuts and Powell's resistance
- July jobs report shows significant decrease
- Powell's stance on tariffs and interest rates
- Supreme Court suggests Trump cannot remove Powell for policy disagreements
- Waller and Bowman's stance on tariffs and interest rates
The escalating tension between President Trump and Federal Reserve Chair Powell, rooted in their differing views on interest rates and monetary policy, has been a significant topic in both business and policy-and-legislation circles. Amid Trump's demands for aggressive interest rate cuts to boost the economy and Powell's firm stance on data-driven decisions and independence, their relationship remains contentious.
The ongoing discourse between Trump and Powell, fueled by Trump's criticisms and Powell's resistance, is also intertwined with general news, as economic data such as the July jobs report and the impact of Trump's tariffs continue to influence their decisions and the future of monetary policy.
