Aamer Madhani and Josh Boak, Associated Press
WASHINGTON (AP) — President Donald Trump on Thursday denounced Federal Reserve Director Jerome Powell, reiterating frustration that the Fed has not been actively cutting interest rates, saying central bank leaders can’t “lay off soon enough.”
Trump hinted at a move to Fire Powell, whose term will not expire until next year. Republican president broadside comes a day after Powell says he will not change key interest rates while he seeks “clearer-departmental changes to policy changes in areas such as immigration, taxation, regulation and tariffs.
Powell’s comments helped the stock fall on Wednesday.
“Oil prices have fallen, groceries (and eggs too!) are falling, and the US is rich in tariffs,” Trump said in a social media post.
Referring to the European Central Bank, he said that Powell should have said, “Look, like the ECB, should have lowered interest rates quite a while ago, but he certainly should have reduced them. Powell’s firing will not be quick enough!”
On Thursday, the European Central Bank cut its key interest rates from 2.5% to 2.25%.
Powell was originally appointed by Trump in 2017 and in 2022 he was appointed by President Joe Biden for another four-year term. At a press conference in November, Powell indicated that if Trump asks him to resign, he will not resign.
He also said that removal or demoting of the finest Fed officials is “not permitted under the law.”
Trump’s comments come in the backdrop of a lawsuit heading to the Supreme Court, where the president can decide whether heads of independent agencies such as the Fed can be fired. Powell said Wednesday that he was watching the incident.
“The sudden crystallization of the threat to FRED’s independence will strengthen the stress of the market,” wrote Krishna Guha, an analyst at investment bank Evercore ISI, on Thursday. “If you like tariff fiasco in the market, you want a FED-independent loss of trade.”
Powell started Trump’s second season in a relatively safe spot. With low unemployment, inflation could have approached the Fed’s 2% target, and escaped the US central banker from President Vitriol.
But Trump’s aggressive and accidental tariffs increased the threat of a recession, a difficult place for Powell, where stabilizing prices and maximizing employment is the order. As the economy weakens due to Trump’s choices, the president appears to be trying to lock Powell’s responsibility down.
Powell said in a statement at the Chicago economy club on Wednesday that the Fed will only make decisions about what is best for all Americans.
“This is the only thing we’re trying to do,” Powell said. “We never affect political pressure. People can say anything they want. That’s fine. That’s not the problem. But we do strictly do what we do without taking into account political or other unrelated factors.”
“Our independence is a matter of law,” continued Powell. “We are not removable except for the cause. We serve very long, seemingly endless conditions. So we are protected by law. Congress can change that law, but I don’t think there is a risk.
Trump has released a tariff rash that has put the US economy and the Fed in increasingly dangerous places. On April 2, the president announced a 90-day suspension, which deployed aggressive tariff hikes with other countries based on the US trade deficit, causing financial market rebounds, and which charged 10% tariffs to most countries while negotiations progress. But Trump has increased tariff hikes in China to 145%, along with existing tariffs on Canada, Mexico, automobiles, steel and aluminum.
Wall Street banks such as Goldman Sachs have increased the chances of a recession beginning. Consumers are increasingly pessimistic in research into employment outlook, fearing that inflation will intensify if import tax costs are passed. The risks of stagflation – stagnant growth and high inflation – make it difficult for the Fed to respond in the same playbook as the recent recession.
Yale University’s Budget Institute estimated that the increase in inflationary pressure from tariffs equals a loss of $4,900 for the average US household.
Associated journalists Sagar Meghani and Christopher Rugaber contributed the report.
Original issue: April 17, 2025 9am EDT
