US President Escalates Pressure on Fed to Boost Economy
Donald Trump has reignited his feud with Federal Reserve Chairman Jerome Powell, demanding immediate interest rate cuts to kickstart the economy and lower debt costs. While stating Powell’s position is secure for now, Trump hinted that he could “force something” if rates do not drop quickly. This situation is part of the presidential campaign and Trump’s desire for a more aggressive economic policy.
“Too High, Too Slow – Cut it Now!”
During an event at the White House, Trump stated that a one-percentage point rate cut could allow the US to save $300 billion per year, while a two-point reduction could double these savings. He accuses Powell of being too slow to act, claiming the Fed is making it harder to manage the country’s growing debt and borrowing costs.
Officials Label Fed’s Inaction as “Monetary Professional Negligence”
Trump’s pressure on the Fed is not new. Commerce Secretary Howard Lutnick and Vice President JD Vance have also criticized the Fed’s stance, calling it “monetary professional negligence.” They argue that Powell’s reluctance to cut rates is harming the economy, especially as inflation decreases, and energy prices fall.
Trump has singled out Europe, where ten rate cuts have already occurred, as an example of how central banks should respond when inflation cools. He believes the US is falling behind and losing economic momentum.
Can He Really Fire Powell ?
Although Trump has the constitutional power to remove Powell, doing so could shake the markets. Legal experts argue that this decision would damage the Fed’s credibility and likely raise long-term interest rates. Trump seems aware of these risks, which is why he has not taken action yet.
With falling energy prices and stable inflation data, Trump’s calls for rate cuts could escalate. But it remains to be seen if the Fed will listen or if Trump will follow through on his threats.
