Trump berates Powell again for not cutting rates

Washington — US President Donald Trump renewed his criticism on Thursday of Federal Reserve chair Jerome Powell, calling him a “fool” and complaining that the Fed is refusing to lower interest rates.

Trump has been on the war path against Powell in recent weeks, threatening to fire him — then backing away from that threat. He has repeatedly lashed out at Powell in posts on his social media site, calling him “a major loser” in one post.

Trump, speaking a day after the Fed — as financial markets had widely expected — kept its key borrowing rate unchanged, said cutting interest rates would be “like jet fuel” for the economy, “but he doesn't want to do it”, adding, Powell is “not in love with me”.

Early last week, in remarks suggesting he is more knowledgeable about interest rates than Powell, Trump said he was not “a huge fan of” Powell.

The Fed this week kept short-term borrowing costs in the 4.25%-4.50% range, where they have been since December. While the huge tariffs imposed by Trump are likely to increase inflation and unemployment, the economy so far has shown little sign of either, Powell said on Wednesday, giving the central bank time to wait until there is more clarity on where tariffs actually end up and assess their effect on prices and jobs. At that point the Fed can act as needed, and potentially aggressively, he said.

Trump had a different view. “‘Too Late’ Jerome Powell is a FOOL, who doesn’t have a clue,” he wrote in a post on Truth Social on Thursday morning. “Oil and Energy way down, almost all costs (groceries and ‘eggs’) down, virtually NO INFLATION ...”

Cutting interest rates typically boosts the economy, but in a time of above-target inflation, doing so could also unleash an upward spiral of price pressures that Powell has said must be avoided.

Trump appointed Powell as the Fed chair in 2018, during his first term in the White House, and Democratic President Joe Biden appointed Powell to a second four-year term in 2022.

Trump and UK Prime Minister Keir Starmer on Thursday announced a “breakthrough deal” on trade, the first since Trump announced steep import levies on most US trading partners on April 2. He soon  paused some of them to allow time to reach deals with countries.

That first glimmer of certainty amid what had been an increasingly foggy outlook makes the Fed actually less likely to cut rates aggressively. That was the signal from financial markets as traders pulled back on Thursday from what had been overwhelming bets on a July start to interest rate reductions, with any more than three rate cuts by year’s end seen as increasingly unlikely.

Trump has made no secret of his dissatisfaction with Powell’s conduct of monetary policy not long after picking him as Fed chair early in his first term. Trump’s suggestion last month that he would like Powell gone sent stocks and bonds down as investors priced in the chance the Fed could lose its independence and thereby its ability to restrain inflation.

Powell declined to comment about Trump’s criticisms in his news conference on Wednesday. He has said he intends to complete his term as chair, which ends in about a year.

Powell met three times with Biden. Powell’s calendars also show he had a 90-minute dinner with Trump at the White House during his first stint there, as well as several other shorter encounters, but has not spoken with him since 2019.

Powell said on Wednesday that he never has sought and never would seek a meeting with a president. “It’s always been the other way,” he said on Wednesday.

Talking to Powell, Trump said on Thursday, is “like talking to a wall”.

Reuters