President blasts central bank governor, says Fed has done 'terrible job' following latest rate decision
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Photo: Gage Skidmore, CC BY-SA 3.0, via Wikimedia Commons
President Donald Trump launched a broadside against the Federal Reserve after the central bank hit pause on rate cuts, accusing Fed decisionmakers of doing a “terrible job” on bank regulation and curbing inflation.
In a Truth Social post following Wednesday’s rate announcement, Trump attacked Fed chair Jerome Powell and said its policies had contributed to driving up prices.
“Because Jay Powell and the Fed failed to stop the problem they created with inflation, I will do it by unleashing American energy production, slashing regulation, rebalancing international trade, and reigniting American manufacturing,” Trump said, also repeating familiar attack lines used against government agencies’ spending on diversity and climate initiatives.
“If the Fed had spent less time on DE&I, gender ideology, ‘green’ energy, and fake climate change, inflation would never have been a problem,” he claimed.
Trump’s comments came shortly after the Fed decided to hold rates steady in its first announcement of the year, taking a wait-and-see approach to what’s in store for the months ahead.
The central bank had cut rates in each of its last three decisions prior to its January announcement, trimming by a whole basis point between September and December, but strong recent labor market growth and inflationary concerns appear to have convinced Fed decisionmakers that now is the time to hold rates where they are.
Powell: Fed is in no rush to reduce rates again
Trump’s new administration is looming large over the Fed’s approach for the year, with the president having issued a slew of executive orders during his first week in office and hinted he’ll put pressure on the central bank to move rates lower.
Fed chair Jerome Powell said at a press conference Wednesday that decisionmakers are in no hurry to cut rates again, although they’re keeping a close eye on the potential for economic upheaval caused by threatened tariffs against a range of countries by the Trump administration.
Chair Powell reads opening statement at the #FOMC press conference on January 29, 2025:https://t.co/GnRkPfDScR
— Federal Reserve (@federalreserve) January 29, 2025
“The range of possibilities is very, very wide,” Powell said. “We don’t know for how long or how much, what countries. We don’t know about retaliation. We don’t know how it’s going to transmit through the economy to consumers. That really does remain to be seen.”
Melissa Cohn (pictured below), regional vice president at William Raveis Mortgage, told Mortgage Professional America the Fed’s decision to hold steady was likely the right move as it weighs up the early days of the new presidency.
“It’s very difficult for the Fed to make a decision to either raise rates or to cut rates when we’re so early on in the Trump administration, and without really understanding the impact of his policies and what they’ll do to the economy with regards to inflation and employment,” she said.
Inflation a growing concern for Fed decisionmakers
Especially noteworthy in the Fed’s statement was the lack of a reference to inflation making progress towards its 2% goal, a hallmark of recent rate announcements by the central bank.
Cohn said that reflected the difficulty of assessing what lies in store for the economy so early on under Trump, and whether his administration’s policies could put upward or downward pressure on inflation.
She said Powell struck the right tone as the Fed gears up for what could be a challenging year ahead. “I think he does a very good job of saying that the Fed is acting independently. They’re looking at policy and the impact, primarily on the rate of inflation, especially since they have less confidence that the rate of inflation is going to drop as quickly as they would like it to,” she said.
“We’re just going to have to wait and see how the Fed moves and reacts to economic conditions, and I think the outlook is a little bit cloudy right now just because we don’t know what the new administration is going to do or how much they’ll be able to do – and what the impact’s going to be.”
The Fed has plans to launch a review of its monetary policy framework this year, although Powell told reporters that the 2% inflation target was not up for discussion and would remain intact throughout that process.
Markets dialed back expectations for rate cuts in 2025 in the wake of Powell’s announcement, with the CME FedWatch Tool showing after the decision that the fed funds futures market views a 12% chance of no movement by the Fed in 2025 and a 31% prospect of just a single cut.
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