Former President Donald Trump has publicly criticized Federal Reserve Chairman Jerome Powell for his handling of interest rates, expressing dissatisfaction with the Fed’s monetary policy decisions. In a now-deleted Truth Social post, Trump made it clear that he personally wanted Powell fired more than anyone. Yet, he says, the Fed chair has historically been “too late and wrong” on his economic predictions.
Jerome Powell has served as Chairman of the Federal Reserve since 2018. Trump first nominated him during his first term. Earlier this year, President Joe Biden renominated Powell—inarguably a bipartisan recognition of his pivotal role in shepherding the U.S. economy through troubled waters. Trump has recently escalated his pressure on Powell to lower interest rates, claiming that the current rates are hindering economic growth.
Trump’s frustrations intensified after Powell warned that Trump’s own tariffs on imports could lead to increased inflation. Powell was unequivocal about the inflationary effect of these tariffs which would produce “at least some near-term increase in inflation.” Former president Trump was none too happy with this declaration. Trump has always been a proponent of lower interest rates, insisting that they’d help businesses invest and hire and get the economy humming again.
Though Trump is urging action, Powell is still bound to independence in terms of monetary policy. To protect the independence of the institution, the White House is normally very cautious not to lobby the Federal Reserve in public. This appointment is not just a rubber stamp, this independence is incredibly important especially as the Fed addresses serious economic headwinds. The Senate already has the authority to confirm the chair of the Federal Reserve. This provides a crucial firewall between the presidency and monetary policy.
In his recent remarks, Trump took to social media to express his discontent with Powell’s performance. He accused the Fed chair of being “always too late and wrong,” referring to a recent report issued by Powell that Trump described as a “complete mess.”
“The ECB is expected to cut interest rates for the 7th time, and yet, ‘Too Late’ Jerome Powell of the Fed, who is always TOO LATE AND WRONG, yesterday issued a report which was another, and typical, complete ‘mess!’” – Donald Trump
Powell has defended his policies by asserting that the U.S. economy remains well-positioned despite the challenges posed by inflation and global economic uncertainties. Second, he reiterated the need for caution in raising interest rates. Even if the changes do come through, they will have only modest effect on inflation and employment.
Half the fun of the ongoing battle between Trump and Powell is the larger debate it’s creating over this country’s monetary policies. It is rare for former presidents to comment publicly on economic policy. Given Trump’s unprecedentedly vocal criticism, many are wondering how future political leaders will engage with the Fed.