Fed chair Powell says no Trump pressure to lowering interest rates
President Donald Trump has put pressure on the Federal Reserve to lower interest rates and Jerome Powell is still saying no.
President Donald Trump said Wednesday he’s already hunting for a new Federal Reserve chair to replace Jerome Powell and has narrowed his search to “three or four people.”
“I know within three or four people who I’m going to pick,” Trump said in response to a question at the NATO summit in the Netherlands. “I mean he’s going out pretty soon fortunately because I think he’s terrible.
Trump didn’t name potential replacements but Bloomberg News has reported that Treasury Secretary Scott Bessent’s name has circulated as one option. Former Fed Governor Kevin Warsh and current governors Michelle Bowman and Christopher Waller also have been mentioned as possibilities.
The past week, both Bowman and Waller backed Trump’s call for the Fed to cut interest rates as soon as a late July meeting.Powell’s term as Fed chief ends in May 2026 and Trump has made no secret of his desire to replace him, badgering him repeatedly on social media and in interviews.
What is the current Fed interest rate?
The president has demanded Powell and the Fed lower a key interest rate from 4.25% to 4.5% to as low as 2.25% to juice the economy and reduce interest payments for the $36 trillion federal debt.
The Fed, an independent agency intended to be insulated from politics, cut the rate by a percentage point in the final months of 2024 but Powell has said officials want to wait to see how Trump’s sweeping tariffs affect inflation before making another move.
“We have no inflation, we have a tremendous economy,” Trump said Wednesday, though the Fed’s preferred inflation measure remains above its 2% goal. “Because of him, because of this guy, we will have to pay… for years, we’ll be paying for him.”
Trump added that if the Fed’s benchmark rate were three points lower, the U.S. government would save $900 billion a year in interest payments.
“Because of this very average mentally person,” Trump said, referring to Powell.
Powell met with Trump at the White House several weeks ago.
“I said to him, ‘Listen, there’s no inflation,’” Trump said Wednesday.
“He said, ‘Maybe there’ll be some.’””
“I said, ‘If there is, you raise the rate.’”
Economists, however, have said that could be too late if lower rates affect Americans’ inflation expectations and start rippling through the economy.
In a social media post after the Fed decided to hold rates steady for a fourth straight meeting last week, Trump called Powell a “numbskull,” a “dumb guy,” and a “Trump Hater.” Powell was confirmed as the Fed’s board chairman in February 2018, after he was nominated by Trump during his first term.
What is the current inflation rate?
Although the Fed’s preferred inflation measure has eased to 2.5%, moderately above its 2% goal, Powell told the House Financial Services Committee on June 24 forecasters have said Trump’s import levies will likely begin to show up more tangibly in retail prices this summer.
It’s unclear, Powell said, if those price gains will amount to one-time rise or a persistent burden on households as they effect Americans’ inflation expectations, leading to a cycle of higher wages and prices.
“We’re saying let’s just wait and see more,” Powell told lawmakers. “It’s just a question of being prudent and careful at a time the labor market is still strong.”
