Trump Criticizes Powell, Fed on Interest Rates, Downplays Firing

Trump Blasts Powell on Interest Rates, Downplays Firing Possibility

U.S. President Donald Trump on Tuesday renewed his sharp criticism of Federal Reserve Chairman Jerome Powell, but downplayed the possibility of firing him. "I think he's done a terrible job, but he'll be gone soon anyway," Trump told reporters at the White House. "In eight months, he'll be out."

Trump's remarks come amid ongoing speculation about Powell's job security and legal questions surrounding Trump's power to dismiss the central bank chief. Trump had repeatedly criticized the Fed for being too cautious on cutting interest rates, even though the central bank lowered its benchmark rate a full percentage point in the lead-up to and around the late 2024 presidential election. Powell's term as chair ends in May 2026.

Trump has accused Powell of being politically motivated, giving him the moniker "Mr. Late," alluding to his perceived tardiness in adjusting interest rates. "He's always late, he should have been cutting rates many times," Trump said. "People can't afford houses because of this guy being a dummy. He kept interest rates up too high, possibly for political reasons."

Fed Building Renovation Draws Scrutiny

In addition to criticizing interest rate policy, the White House has also questioned the Fed's $2.5 billion project to renovate two office buildings in Washington, D.C. White House Deputy Chief of Staff James Blair posted on X Tuesday that government officials plan to tour the project site on Thursday.

Earlier Tuesday, Treasury Secretary Steven Mnuchin said Powell "has been a competent public servant," but he said at the White House that the Fed needs to "have a full internal review, not just of monetary policy but of everything else. The Fed's scope of responsibility has greatly expanded, which is why there's been a big increase in spending."

On interest rates, Mnuchin supported the view that the Fed probably should have eased monetary policy as inflation has largely slowed.

"They spread panic on tariffs, and we've had almost no inflation so far," Mnuchin said. He reiterated Tuesday that the Fed should cut interest rates now.

Further Analysis: Central Bank Independence and Political Pressure

The independence of a central bank is a cornerstone of maintaining economic stability. However, political pressure, as evidenced by President Trump's repeated criticisms, can undermine this independence. Central bank decisions should be based on objective economic analysis, not political considerations.

The delicate balance between independence and accountability is crucial to ensure that the central bank can best serve the interests of the economy. Exploring alternative monetary policy tools, such as quantitative easing or forward guidance, can provide the Fed with greater flexibility in managing economic conditions, independent of short-term political pressures.