Former President Donald Trump escalated his criticism of Federal Reserve Chair Jerome Powell Thursday, urging his removal for what he described as a failure to act swiftly enough on interest rates. The outburst, posted on Trump's Truth Social platform, came just a day after Powell delivered a warning about the potential economic repercussions of Trump's aggressive tariff policies.
Trump, who appointed Powell to lead the central bank in 2018, accused the Fed chairman of consistently being "too late and wrong" in his decisions. "Jerome Powell of the Fed, who is always TOO LATE AND WRONG, yesterday issued a report which was another, and typical, complete 'mess!'" Trump wrote. "Powell's termination cannot come fast enough!"
The feud between Trump and Powell dates back to the early days of Trump's presidency, when Powell began tightening interest rates in response to concerns about inflation and a booming job market. Trump has long criticized Powell's actions, at one point even labeling him "the enemy" for raising rates in 2018, despite his own efforts to influence the Fed's policies.
Trump's latest comments came after Powell warned that Trump's trade policies, particularly the tariffs imposed on several countries, could lead to inflation and an increase in unemployment. On Wednesday, Powell noted that Trump's tariffs were "significantly larger than anticipated" and were pushing the U.S. economy into uncharted territory, potentially triggering stagflation.
Despite the mounting tension, Powell, who was reappointed by President Joe Biden in 2021, has repeatedly emphasized the independence of the Fed. He has stated that the president cannot legally remove him from office before his term ends in 2026, regardless of any political pressure.
Trump's remarks were sparked in part by the European Central Bank's (ECB) decision to lower interest rates for the seventh time this year, a move that further highlighted the Fed's inaction on the matter. "The ECB is expected to cut interest rates for the 7th time, and yet, 'Too Late' Jerome Powell of the Fed..." Trump lamented in his post.
In contrast to Powell's caution, Trump has been pushing for more aggressive economic policies, including significant tax cuts and the easing of trade barriers. Despite initial setbacks in the global markets, including a sharp drop in U.S. bond prices, Trump has touted the tariffs as a boon for American businesses, claiming they are making the U.S. "rich on tariffs."
However, critics have warned that the long-term effects of the tariffs, including rising costs for consumers and disrupted international trade, could harm the broader economy. The World Trade Organization (WTO) has warned that Trump's trade policies could send global trade into reverse and stifle economic growth, particularly in developing countries.
Meanwhile, Powell and other Federal Reserve officials remain focused on curbing inflation without precipitating a recession. While some analysts have echoed Trump's concerns about the ECB's more aggressive rate cuts, others caution that Powell's careful approach is necessary to prevent a more severe economic downturn.
