Trump attacks Fed Chairman Powell: Ill-headed” or smart head?

Trump attacks Fed Chairman Powell: Ill-headed” or smart head?

US President Donald Trump has once again criticized Fed Chairman Jerome Powell. At an event in the White House, Trump described Powell as a "hollow" and expressed his dissatisfaction with the US Federal Reserve's current monetary policy. Trump even vaguely threatened to take coercive measures to force interest rate cuts. He emphasized that an increase in the key interest rate would only be justified if the inflation rate actually increased, which is currently not the case [ oe24 ] .

The Fed's next interest rate decision is next Wednesday. However, analysts do not expect a rate cut at this meeting. The Fed had already taken a wait-and-see approach due to Trump's tariff policy. Trump is seen as an advocate for low interest rate policies to promote economic growth and has criticized Powell verbally and on social media, including on Truth Social, where he called for rate cuts [ daily news ].

Tensions between Trump and Powell

The tensions between Trump and Powell are not new. Trump had previously called Powell a “fool” and “enemy” and repeatedly accused him of slowing growth by raising interest rates. Trump's anger is particularly pronounced as the Fed did not cut interest rates at its last meeting, continuing a rate pause that began in January. The current key interest rate is between 4.25% and 4.5%, which is the highest level during Trump's first term [ daily news ] .

Trump nominated Powell for his first term, but no longer sees him as a suitable candidate for possible re-election. Joe Biden then nominated Powell for a second term, which will last until 2026. Trump has made clear he will not nominate Powell again [ oe24 ] .

Economic uncertainties and inflation

The tense situation is also exacerbated by the economic uncertainties brought about by the current US economic policy under Trump. Trump's imposition of tariffs against Europe and China from April 2025 could boost inflation in the US. Higher tariffs are seen as a turbocharger for potential loss of consumer purchasing power and a drag on economic growth [ DZ Bank Research Blog ] .

The Fed expects inflation to average 2.7% this year, up from its previous forecast of 2.5%. The Fed blames Trump's tariff policy for its dovish interest rate policy and has classified its monetary policy measures as restrictive given the economic uncertainties and inflation [ daily news ] .

In summary, a complex picture emerges of personal conflicts and economic challenges. Trump sees Powell as an obstacle to faster economic growth while Powell strives to control inflation and ensure economic stability. The Fed's next decision is highly anticipated and could have far-reaching consequences for the US economy.