Trump pressures Fed's Powell to cut rates by ‘a full point'
Jerome Powell, chairman of the US Federal Reserve, speaks during the Federal Reserve IF 75TH Anniversary Conference in Washington, DC on June 2. PHOTO: BLOOMBERG
– President Donald Trump urged the Federal Reserve to cut interest rates by a full percentage point, intensifying his pressure campaign against Chair Jerome Powell.
''Too Late' at the Fed is a disaster!' Mr Trump posted June 6 on social media, using a derisive nickname for Mr Powell. 'Despite him, our country is doing great. Go for a full point, rocket fuel!'
While the size of Mr Trump's rate-cut demand – a full percentage point – was unusual, his call for the central bank to lower rates is not new.
The president, who first nominated Mr Powell to the job in 2017, has regularly complained that the Fed chief has been too reluctant to cut borrowing costs. Mr Trump pushed Mr Powell to lower rates in a White House meeting last month.
Mr Trump said later June 6 that he has considered successors for Mr Powell, whose term as chair ends in May 2026. 'It's coming out very soon,' he told reporters on Air Force One, without naming any potential candidates.
'I have a pretty good idea who,' Mr Trump added.
After Mr Trump was specifically asked about Kevin Warsh, a former Fed governor considered among the potential successors to Mr Powell, he responded: 'He's very highly thought of.'
Fed officials are scheduled to meet June 17-18 in Washington and are widely expected to leave their benchmark rate unchanged, as they have done all year. Many policymakers have said they want to wait for more clarity over how Mr Trump's policies on trade, immigration and taxation will affect the economy before they alter rates.
It would be highly unusual for the Fed to lower its benchmark rate by a full percentage point at one meeting outside of a severe economic downturn or financial crisis. Officials last cut rates by a full point in March 2020, when the US economy was cratering as the Covid-19 pandemic prompted widespread shutdowns and layoffs, triggering a deep recession.
The Fed targets 2 per cent inflation over time, and adjusts interest rates with the goal of maintaining both stable prices and maximum employment – the two responsibilities assigned to it by Congress. Lowering rates too quickly could stoke inflationary pressures, while holding them at high levels for too long could restrain the economy more than desired.
Mr Trump posted his call on social media after new data showed US job growth moderated in May, but was still better than expected, and the unemployment rate held at a low 4.2 per cent. In a separate statement, the White House touted the 'booming economy,' including job gains, increasing wages and tame inflation.
Fed policymakers in recent weeks have described the labour market as on stable footing, which they've said provides further cause for them to keep borrowing costs steady for now – especially with inflation still above their target.
Mr Trump, in a subsequent message, accused Mr Powell of 'costing our country a fortune' by keeping rates at their current level, saying they have increased borrowing costs for the federal government that should be 'much lower'. BLOOMBERG
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