President blasts Fed chair, again demands lower rates
Image from Gage Skidmore from Peoria, AZ, United States of America, CC BY-SA 2.0, via Wikimedia Commons
President Trump has launched another broadside against Jerome Powell, urging the Federal Reserve chair’s “termination” from his post and once again demanding the central bank cut interest rates.
In a Truth Social post Thursday morning, Trump described a speech by Powell yesterday – in which the Fed chief appeared to rule out an imminent rate reduction – as a “complete ‘mess’” and defended his tariff policies, which Powell claimed are increasing the risk of inflation and a slowdown in US economic growth.
Powell “should have lowered Interest Rates, like the ECB [European Central Bank], long ago, but he should certainly lower them now,” Trump wrote. “Powell’s termination cannot come fast enough!”
Yesterday’s address to the Economic Club of Chicago saw Powell suggest the risks of Trump’s tariff wave, which includes enormous levies on most Chinese imports and charges on Canadian steel and aluminum, were “significantly larger than anticipated” although he dismissed the prospect of a snap decision by the central bank to bring rates lower.
“For the time being, we are well positioned to wait for greater clarity before considering any adjustments to our policy stance,” he said.
Fed Chair Powell at @EconClubChi: "As that great Chicagoan Ferris Bueller once noted, "Life moves pretty fast." For the time being, we are well positioned to wait for greater clarity before considering any adjustments to our policy stance." pic.twitter.com/bYryQN1FmX
— CSPAN (@cspan) April 16, 2025
US Treasuries slid after Powell’s hawkish remarks, while yields jumped – sending the 10-year rate, which strongly influences US mortgage rates, to 4.30%, as traders lowered expectations for Fed cuts this year.
Could Trump fire Powell?
Trump, who has long called for the Fed to bring interest rates lower, has frequently clashed with Powell, whom he appointed as chair in 2018, and nicknamed him “Too Late” in Thursday’s Truth Social blast.
While the president has hinted at attempting to fire or demote Powell in the past, Powell has said it was “not permitted under the law” for a president to remove a Fed chair.
Powell’s Thursday comments also doubled down on the Fed’s independence from external input, even amid Trump’s demands for rate cuts. “We’re never going to be influenced by any political pressure,” he said. “People can say whatever they want. That’s fine. That’s not a problem, but we will do what we do strictly without consideration of political or any other extraneous factors.”
The Fed trimmed its funds rate three times towards the end of 2024, bringing it from a target of 5.25-5.50% to its current level of 4.25-4.50%.
But the central bank hit pause on those cuts on January 29 before leaving rates untouched again on March 19 – and its third decision of the year, scheduled for May 6-7, is now expected to see another hold as it weighs up how Trump’s tariffs impact the economy.
Still, money markets believe the Fed will lower rates before the end of 2025, potentially through three 25-basis-point cuts, with odds of a fourth reduction viewed at around 50-50.
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