Table of Contents
- Powell warns Trump’s tariffs could create inflationary pressures, complicating monetary policy decisions and slowing economic growth, placing the Federal Reserve in a challenging position not seen in decades
- Trump criticizes Powell’s handling of interest rates, calling him “Too Late Jerome” and accusing him of being wrong, while demanding Powell’s termination and claiming tariffs are making the U.S. rich
- Powell emphasizes the Fed’s independence, refusing to comment on political policies, and stresses the importance of waiting for clarity before adjusting interest rates amidst inflationary risks and economic uncertainty
The latest speech from Federal Reserve Chairman Jerome Powell certainly did not sit well with many people. In a public statement at the Economic Club of Chicago yesterday, the head of the U.S. Central Bank shared stark warnings about the potential effects of Trump’s aggressive tariff policy.
In sum, Powell appeared to take a precautionary stance before going forward with drastic measures in regards to interest rate cuts. He emphasized that the Fed is well-positioned to wait and assess the inflationary effects of the new trade policy—which led many to conclude that the chance of a new interest rate cut in May is highly unlikely.
Trump Goes on The Offensive Against Powell
Donald Trump did not sit well with yesterday’s remarks. Today, in a post on his Truth.Social account, the former President criticized Powell, calling him “Too Late Jerome” and accusing him of being “always TOO LATE AND WRONG.”
Trump lambasted Powell’s handling of interest rates, stating, “Too Late should have lowered Interest Rates, like the ECB, long ago, but he should certainly lower them now.” He also claimed that Powell’s recent report was a “complete mess” and reiterated his belief that tariffs are making the U.S. “RICH ON TARIFFS.”
This is far from the first time the President has pressured Jerome Powell to take action and continue decreasing interest in America. Despite the Fed performing three consecutive slashes in 2024, Powell is yet to oversee an interest rate decrease during the Trump administration.
Trump Calls For Powell’s Termination
On the same post, the U.S. President asserted that “Powell’s termination cannot come fast enough!”. Despite at surface level this looks like a rivalry between the president and the Fed Chair—Powell has refrained from attacking the U.S. President and his policies.
When asked to comment on the current administration’s policies during recent public appearances, Powell refused to do so, arguing that his job as Fed Chair was to work only with economic data and monetary policy, rather than engage in political debates.
Powell was appointed by Donald Trump in 2018 and has since been reappointed as Chairman, continuing to serve through multiple presidential administrations. In dealing with the after-effects of the COVID crisis, Powell overlooked the rise in American interests to combat inflationary pressures and stabilize the economy.
Can Trump Fire Powell?
A sitting United States President does not have the power to terminate a Federal Reserve Chair without an obvious cause. The American Constitution strictly protects the Chair from being removed for policy disagreements—therefore allowing the Central Bank to work independently from the White House.
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