Trump calls on Fed board to take control from Powell over interest rates
In a series of social media posts on Friday, Trump — who has called for lowering interest rates for months — escalated his attacks on Powell, suggesting that the central bank chief should be stripped of his powers.
'Jerome 'Too Late' Powell, a stubborn MORON, must substantially lower interest rates, NOW,' Trump wrote.
'IF HE CONTINUES TO REFUSE, THE BOARD SHOULD ASSUME CONTROL, AND DO WHAT EVERYONE KNOWS HAS TO BE DONE!'
Earlier this week, Powell announced that interest rates would remain steady at 4.25 to 4.5 percent.
The central bank's rates indirectly set the rates for private lending across the country.
When the Federal Reserve, known as the Fed, sees the need to accelerate economic activity, it cuts interest rates to lower the cost of borrowing and pump money into the economy.
Conversely, when prices rise too rapidly, the Fed raises interest rates to bring the cost of living under control.
The central bank operates independently of political officials.
During the COVID-19 pandemic, interest rates plummeted to prevent a prolonged recession during the lockdown.
But as supply-chain disruption and an abundance of money in the economy sparked an inflation crisis in 2022, the Fed hiked interest rates to levels not seen since the 2008 Great Recession.
An advocate for greater investments in the US economy, Trump has been arguing that inflation is now at sustainable levels, so there is no need for interest rates to remain high.
Over the past year, the central bank slashed interest rates by about 1 percent, but Trump has been demanding more aggressive cuts.
On Wednesday, Powell cited a risk of inflation linked to Trump's trade policies as the reason behind his decision not to drop interest rates.
'Higher tariffs have begun to show through more clearly to prices of some goods, but their overall effects on economic activity and inflation remain to be seen,' he told reporters.
Earlier this month, a government report showed that consumer prices rose by 0.3 percent from May to June, compared with 0.1 percent the previous month, as Trump's tariffs started to set in.
Powell did not rule out that the uptick in prices could be 'short-lived', but he also warned that it may become persistent, arguing for a cautious approach while monitoring inflation.
'For the time being, we're well positioned to learn more about the likely course of the economy and the evolving balance of risks before adjusting our policy stance,' he said. 'We see our current policy stance as appropriate to guard against inflation risks.'
The decision proved controversial, with the Fed board seeing rare dissent from two members, both Trump appointees, who publicly argued for more rate cuts.
On Friday, Trump warned Powell that the dissent 'WILL ONLY GET STRONGER'.
'Too Little, Too Late,' the US president wrote. 'Jerome 'Too Late' Powell is a disaster. DROP THE RATE! The good news is that Tariffs are bringing Billions of Dollars into the USA!'
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