Introduction to the Trump-Powell Feud
President Donald Trump has been criticizing Federal Reserve Chair Jerome Powell for months, calling for ultra-low interest rates. Trump claims that the US has one of the highest interest rates in the world and that the Fed’s board "should be ashamed of themselves" for allowing this to happen. He posted a chart ranking central banks by their key interest rates, with a handwritten note criticizing Powell directly.
The Reason Behind Trump’s Criticism
Trump’s criticism of Powell stems from his belief that the federal government is paying massive interest rates on its debt due to the Fed’s failure to lower rates. Trump has said that the Fed’s inaction has "cost the USA a fortune" and that Powell continues to make mistakes. However, the Fed’s decision not to lower rates is based on its focus on taming inflation and preserving the labor market’s health.
The Fed’s Perspective
Powell has avoided responding to Trump’s criticism, stating that the Fed is only focused on successfully taming inflation and preserving the labor market’s health. Central bankers do not consider the government’s finances when determining policy moves. The Fed leader has told Senate lawmakers that "we don’t take into consideration political factors" when setting rates.
The Impact of Trump’s Criticism
Trump’s criticism of Powell has been intense, with the president calling the Fed chair a "fool," a "numbskull," and a "stupid person." However, Powell’s apolitical, data-driven approach has been praised by other central bankers around the world. ECB President Christine Lagarde has called for an applause for Powell, saying that he "epitomizes the standard of a courageous central banker."
The Future of the Fed
Powell’s term as chair ends in May 2026, but Trump has said that he will announce his pick for the next Fed leader imminently. This would be an unprecedented development in the Fed’s 111-year history. Whomever Trump names would effectively be acting as America’s "shadow" Fed chair, potentially confusing financial markets and weakening the dollar.
Potential Candidates for the Top Job
There are several contenders for the top job at the Fed, including Treasury Secretary Scott Bessent, Kevin Warsh, a former Fed governor, and Christopher Waller, a current Fed governor. Trump has said that he wants someone who can lower interest rates, and has praised Warsh as a "very talented guy."
Conclusion
The feud between Trump and Powell is ongoing, with Trump continuing to criticize the Fed chair for not lowering interest rates. However, the Fed’s decision not to lower rates is based on its focus on taming inflation and preserving the labor market’s health. As the future of the Fed remains uncertain, one thing is clear: the next Fed chair will play a crucial role in shaping the US economy. With Trump set to announce his pick for the top job, the world will be watching to see who will become the next leader of the Federal Reserve.
