Washington, D.C. — President Donald Trump intensified his attacks on Federal Reserve Chair Jerome Powell on Thursday, criticizing the central bank for not reducing interest rates. Trump asserted that lowering rates would significantly boost the economy, likening the effect to “jet fuel,” and expressed frustration that Powell appears resistant to such measures.
The Federal Reserve announced earlier this week that it will maintain short-term borrowing rates between 4.25% and 4.50%, a status quo that has persisted since December. During a press conference, Powell explained that despite looming tariffs likely driving both inflation and unemployment, the current economic indicators do not yet signal a pressing need for immediate action. He emphasized the central bank’s strategy of monitoring developments to better understand the ramifications of the tariffs before making any decisions.
Typically, reducing interest rates can stimulate economic growth by making borrowing cheaper. However, in an environment where inflation is already above target levels, such a move could potentially exacerbate inflationary pressures, a situation Powell said the Fed aims to avoid at all costs.
Trump’s discontent with Powell’s monetary policy has been evident, as he occasionally hints at a desire for the Fed chair’s removal. This rhetoric has raised concerns in financial markets, with investors fearing that perceived pressures on the Fed could undermine its independence, a crucial element in controlling inflation.
When asked about Trump’s criticisms, Powell chose not to engage, reiterating his commitment to fulfilling his term, which is set to conclude in approximately a year. His nonchalant response comes amid heightened scrutiny of the Fed’s role and decisions in an unpredictable economic landscape.
In light of the ongoing tariff discussions and their uncertain impact on the economy, Powell reiterated that the central bank would be prepared to act if necessary. The Fed seems poised for a cautious approach, weighing global economic conditions while remaining vigilant against potential inflationary spikes.
Looking ahead, the future of U.S. monetary policy will heavily depend on how trade tensions evolve and their effects on both the job market and consumer prices. With several key economic indicators on the horizon, the central bank’s next steps will be closely monitored by financial markets and policymakers alike.
As Trump continues to voice his opinions on interest rates, the dynamics between the White House and the Federal Reserve could shape economic policies in the months to come, potentially leading to more volatility in financial markets as investors react to political pressures.