Trump Calls for Federal Reserve Board to Take Control from Chair Powell: What This Means for the Economy

On Friday, former President Donald Trump took a swipe at Federal Reserve Chair Jerome Powell, urging the Fed’s board to step in and take action if Powell doesn’t lower interest rates significantly. This criticism comes after months of tension, with Trump labeling Powell as “stubborn” for not adjusting rates to his liking.

The Fed’s role is to keep prices stable and maximize employment. While Powell has maintained steady interest rates this year, he argues it’s crucial to gauge the effects of Trump’s tariffs on inflation first.

Trump believes cutting interest rates could boost the economy and ease debt burdens for both the government and everyday borrowers. He insists there’s barely any inflation, even though the Fed’s key inflation measure is currently above its 2% target at 2.6%.

He’s pushing for a dramatic reduction of 3 percentage points, which would lower the benchmark rate from about 4.33%. However, experts warn that such a substantial cut could flood the economy with money, potentially causing inflation to rise even faster.

Recent research from the Brookings Institution reveals that managing inflation while stimulating growth is a tricky balance—one that requires careful consideration of multiple economic factors.

The Supreme Court previously indicated that Trump couldn’t dismiss Powell merely for disagreeing on policies. That led the White House to explore whether Powell could be removed due to cost issues from Fed projects with hefty price tags.

Powell’s current term will last until May 2026, at which point Trump could suggest a new candidate for the position, should he return to power.

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