President Donald Trump is turning up the heat on Federal Reserve Chair Jerome Powell, demanding a seismic shift in who calls the shots at the central bank. His latest move, a bold call for the Fed’s board of governors to strip Powell of authority, signals a deep frustration with the current economic playbook.
According to PBS NewsHour, Trump took to Truth Social to blast Powell as “stubborn” for refusing to slash short-term interest rates. This isn’t a one-off jab; the president has been hammering Powell for months with sharp criticism over monetary policy.
The heart of the dispute lies in Powell’s decision to keep the Fed’s benchmark rate for overnight loans steady this year. He’s waiting to gauge the ripple effects of Trump’s sweeping tariffs on inflation, a cautious approach that’s drawn the president’s ire.
Trump is pushing for a dramatic cut of 3 percentage points, dropping the rate from its current average of 4.33%. He argues this would fuel stronger economic growth and ease debt servicing costs for both the government and everyday homebuyers.
On Truth Social, Trump warned that if Powell doesn’t “substantially” lower rates, “THE BOARD SHOULD ASSUME CONTROL, AND DO WHAT EVERYONE KNOWS HAS TO BE DONE!” But let’s unpack that shout; forcing such a steep cut could flood the economy with cash it can’t handle, risking a surge in inflation that hits working families hardest.
The president also claims inflation is virtually nonexistent, despite the Fed’s preferred measure sitting at 2.6% annually, above its 2% target. That gap, though small, isn’t trivial when you’re trying to keep prices stable for folks already squeezed at the checkout line.
Powell’s mandate at the Fed is clear: stabilize prices while maximizing employment. Holding rates steady to assess tariff impacts shows a commitment to data over political pressure, even if it frustrates those itching for quick relief.
Trump’s verbal assaults paint Powell as out of touch, but the chair’s restraint might be the firewall against reckless overheating. Rushing into deep cuts without hard evidence could turn a manageable inflation bump into a full-blown spiral.
The Fed isn’t just a political punching bag; it’s a cornerstone of economic balance. Powell’s approach, while not flashy, prioritizes long-term stability over short-term populist wins, a stance that deserves more than social media scorn.
Trump’s ability to oust Powell isn’t as straightforward as he might hope. A Supreme Court ruling from May clarified that the president can’t remove the Fed chair over mere policy disagreements, tying his hands on direct action.
The White House has since explored whether Powell could be fired for cause, pointing to cost overruns in the Fed’s $2.5 billion renovation projects. It’s a creative angle, but a shaky one when the real beef seems rooted in rate policy, not construction budgets.
Powell’s term as chair runs until May 2026, giving Trump a future shot to install a Senate-confirmed replacement. Until then, this clash over control remains a noisy standoff with limited immediate leverage.
This feud isn’t just personal; it’s a fundamental clash over who steers America’s financial ship. Trump’s push for board control and aggressive rate cuts reflects a belief that growth must trump caution, especially when tariffs are already shaking up markets.
Yet Powell’s dug-in position serves as a reminder that independent central banking isn’t meant to bend to political whims. His focus on inflation data over tariff fallout or presidential demands underscores a system designed to outlast any one administration’s agenda.
In the end, this tussle exposes a deeper divide on how to balance growth, stability, and autonomy in turbulent times. While Trump’s frustration with high rates resonates with those craving economic relief, sidelining a deliberate Fed risks consequences that no amount of social media bravado can undo.
