President Donald Trump has escalated his personal war on Federal Reserve Chairman Jerome Powell. He had already attacked Powell, calling her a “major loser” on Truth Social. This decision follows a stark warning from Trump that the U.S. economy could tank if the Federal Reserve Board doesn’t cut interest rates right now. The president’s comments reflect his growing frustration with Powell, whom he appointed during his first term.
Trump recently asserted that there is “virtually no inflation” in the United States today. We’re not even at super high fall energy costs — prices for everything else have fallen too,” he noted. He’s been leading the charge for what he dubs “Preemptive Cuts” in interest rates. He argues that if we fail to take this action, it might have dire consequences for our economic growth.
In a succession of tweets, Trump lamented various aspects of the economic picture that he deems unacceptable. He stated, “With these costs trending so nicely downward, just what I predicted they would do, there can almost be no inflation, but there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW.”
The president’s pressure campaign is designed to convince Powell to lower interest rates, which the president argues would spur more economic growth. At the same time, Trump’s administration is reportedly looking into the legality of firing Powell before his term ends in May 2026. Despite that, Powell has repeatedly insisted that he is legally untouchable.
While Trump has pressed for lower rates, Powell has signaled a wait-and-see approach to monetary policy changes is warranted. He emphasized that the Federal Reserve is willing to be patient and see more clarity before deciding to shift their stance. In a recent remark, Powell noted that any premature actions could likely “move us further away from our goals… probably for the balance of this year.”
The resulting market reactions to Trump’s aggressive rhetoric have been profound. On Monday morning, the Dow Jones Industrial Average dropped more than 600 points within minutes of trading opening. At the same time, the Nasdaq tanked almost 2.5%. It led to the U.S. dollar sinking to its lowest levels since 2022. This drop illustrates investor concern over the President-elect’s proposed tariffs and their potential negative impact on long-run economic growth.
Here’s how experts have responded to what’s at stake with Trump’s unprecedented assaults on Powell. Krishna Guha called it a stupid and dangerous move that undermines Federal Reserve independence. He added, “Injecting doubt and uncertainty into the Federal Reserve’s independence raises the bar for the Fed to implement cuts.” If markets thought you were serious and were willing to try to remove the Federal Reserve chairman, the markets would freak out. You’d likely observe yields spike, the dollar fall, and equities tumble. He further commented, “I can’t believe that that’s what the administration is trying to achieve.”