Trump Calls Out Powell on Rising Interest Rates as Fed Official Advocates for Lower Borrowing Costs

Trump’s Standoff with the Federal Reserve

Recently, former President Donald Trump criticized the Federal Reserve’s chair, Jerome Powell, saying that he should lower interest rates. In a social media post, Trump even called Powell a “numbskull.” But this time, Trump admitted that his harsh words make it harder for Powell to act.

During this heated exchange, Trump insisted he understands the risks involved in his criticism. He said he’s tried different approaches to influence Powell—being nice, neutral, and even nasty—but nothing has worked.

At the same time, Fed Governor Christopher Waller suggested that interest rate cuts might be necessary soon. He believes we are in a good position for such a move. However, he called for a gradual approach, which contrasts with Trump’s desires for significant cuts.

The ongoing clash between Trump and the Fed highlights uncertainty in the U.S. economy. Tariffs imposed by Trump have raised concerns, yet their inflationary effects have not fully appeared. Economists caution that declaring victory against inflation is premature, as businesses still face rising import costs.

In an interview, Waller downplayed the effects of tariffs, suggesting they may only cause a brief spike in inflation. He emphasized that despite Trump’s push for rapid action, the Fed needs to monitor how Trump’s policies play out.

The Federal Reserve’s mission is to maximize employment and stabilize prices. Currently, inflation is relatively low, and the job market is stable. Waller mentioned signs of strain in the labor market, such as rising youth unemployment, which could make a case for lower interest rates sooner rather than later.

Interestingly, Trump is already considering Powell’s successor. His term ends in May 2026, but Trump hinted he may announce his pick soon. This could create a unique situation, with a successor potentially being dubbed a “shadow” Fed chair long before the current term ends—a departure from traditional practices.

Waller’s statements reflect growing concern about the labor market’s health. He noted that while unemployment remains below 4.2%, which is historically low, the market isn’t as robust as it was in 2022. He urged action to prevent potential job losses.

While some Fed officials have expressed caution, Waller advocates for preemptive rate cuts to avoid a downturn. He questioned why the Fed should wait for problems to escalate before acting.

The dynamic between Trump and the Fed unfolds as job market conditions continue to change. It raises important questions about monetary policy and its implications for everyday Americans. As we move forward, the focus will likely remain on how economic indicators evolve and what actions the Fed ultimately decides to take.

For more information on the Federal Reserve and U.S. economic policy, you can refer to CNN.

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