President Donald Trump stepped up his pressure campaign on the Federal Reserve, criticizing the central bank's reluctance to lower interest rates and endorsing the "termination" of Fed Chair Jerome Powell.
In a Thursday morning post on Truth Social, a social media company he partially owns, Trump bashed Powell's
"The ECB is expected to cut interest rates for the 7th time, and yet, 'Too Late' 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. "Oil prices are down, groceries (even eggs!) are down, and the USA is getting RICH ON TARIFFS."
The president capped off his missive by endorsing — although not quite calling for — Powell's removal.
"[Powell] should have lowered Interest Rates, like the ECB, long ago, but he should certainly lower them now," he wrote. "Powell's termination cannot come fast enough!"
Powell yesterday made wide-ranging comments during an onstage appearance in front of the Economic Club of Chicago, saying that the president's new tariff regime would likely increase inflation and dampen economic growth.
Powell, like other Fed officials who have spoken publicly during the past two weeks, said there is no clear playbook for how a central bank should respond to both rising prices and economic deterioration — a phenomenon often referred to as stagflation — and the central bank will need to see how things play out before adjusting policy. But, he said, the Fed's first order response will be to ensure that a price shock from tariffs does not reignite runaway inflation.
"Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem," he said.
As Trump insinuated, the European Central Bank did move to reduce interest rates in the Eurozone by a quarter percentage point on Thursday, bringing its benchmark rate to 2.25%.
The ECB began lowering rates last June in response to economic deterioration and has reduced it by 1.75 percentage points overall since then. The Fed, for its part, began cutting interest rates last September, lowering its target range by a percentage point before pausing reductions at the start of this year.
Unlike the U.S., which faces the risk of both higher prices and an economic slowdown as a result of Trump's burgeoning global trade war, Europe's risks are primarily growth-related.
"The euro area economy has been building up some resilience against global shocks, but the outlook for growth has deteriorated owing to rising trade tensions," the ECB said in its policy statement. "Increased uncertainty is likely to reduce confidence among households and firms, and the adverse and volatile market response to the trade tensions is likely to have a tightening impact on financing conditions. These factors may further weigh on the economic outlook for the euro area."
Trump's tweet is the latest example of the president's willingness to use his bully pulpit to attempt to influence the Fed's monetary policy. Dating back to his first term in the White House the president has often made his monetary preferences known publicly.
Yesterday, Powell said the Fed's policymaking would not be swayed by such pressure.
"We're never going to be influenced by any political pressure," he said. "People can say whatever they want. That's fine. That's not a problem. But we will do what we do strictly without consideration of political or any other extraneous factors."
