Fed Chair Powell Stands Firm on High Interest Rates Despite Trump and GOP Criticism

President Donald Trump has made it clear: he wants the Federal Reserve to lower interest rates. However, Fed Chair Jerome Powell is sticking to his guns and says now is not the time.

This clash was on full display during Powell’s recent testimony before the House Financial Services Committee. The U.S. economy is in a delicate spot. Recent figures show that inflation has dropped significantly since the peak rates seen during the Biden administration. At the same time, unemployment is creeping upwards.

Typically, when inflation is under control, the Fed might cut interest rates to boost borrowing and spending, which can help create jobs. That’s exactly what Trump and some of his allies are advocating for. In a social media post, Trump insisted there’s “no inflation” and declared the economy is “great,” urging Powell to act quickly.

Criticism of Powell isn’t just coming from Trump. William J. Pulte, head of the Federal Housing Finance Agency, echoed the call for rate cuts. He claimed Powell’s decisions aren’t based on solid data but rather influenced by political pressures. He argued that higher rates are harming everyday people who struggle with loans and mortgages.

Powell acknowledged the strain that higher rates impose but emphasized that the threat of rising inflation, along with the uncertainties from Trump’s trade and immigration policies, is why the Fed is hesitant to make any changes. He pointed out that tariffs tend to cause a short-term spike in prices. The Fed’s responsibility, according to Powell, is to prevent this from turning into a lasting inflation issue.

Interestingly, amidst lower current inflation rates, Powell noted that many experts, both inside and outside the Fed, expect inflation to rise again later this year. Current estimates put inflation just above the Fed’s target of 2%, with predictions of a slight uptick in the coming months.

Many economists are expressing concerns about a possible return of stagflation, where both inflation and unemployment rise simultaneously. Apollo Global Management’s chief economist, Torsten Slok, warned that factors like higher oil prices and tariffs could lead to lower economic growth alongside increasing inflation, marking a troubling phenomenon for Americans.

As the debate continues, it’s a critical moment for the U.S. economy. Both sides are seeking a path forward, but the choices made now could have lasting impacts. Understanding these tensions helps paint a clearer picture of where our economic future might be headed.



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