U.S. President Donald Trump has once again taken aim at Federal Reserve Chair Jerome Powell—this time with a sharp accusation: the Fed’s hesitation to lower interest rates may be politically motivated rather than based on economic data. According to Trump, it could be a deliberate attempt to influence the upcoming elections.
🔹 Trump: Rates Should Have Been Cut Long Ago
During a joint press conference with Philippine President Marcos Jr., Trump stated that the U.S. economy is "booming" and deserves a significant rate cut—ideally down to 1%. “I don’t understand why Jerome Powell keeps rates this high. Maybe it’s a political decision. Probably it’s political,” the president said.
Despite the criticism, Trump clarified that he does not plan to remove Powell from office, pointing out that his term ends soon anyway—in May 2026. However, he suggested that if the ongoing investigation into the Fed’s building renovation expands, Powell might be forced to resign sooner.
🔹 Powell’s Speech Ignored Monetary Policy
Trump’s comments came just hours after Jerome Powell delivered a much-anticipated speech—without a single mention of interest rates or monetary policy. This silence frustrated both investors and political opponents, who argue that the Fed is dragging its feet despite clear signs of economic slowdown.
🔹 Powell’s Credibility Under Scrutiny
Trump also took the opportunity to criticize Powell over the cost of renovating the Fed’s headquarters. The chair is currently under fire for allegedly misleading Congress about the $2.5 billion project. Trump ally and Congresswoman Anna Paulina Luna has filed a criminal referral with the Department of Justice for perjury.
Trump suggested that if the accusations prove true, Powell’s position may become untenable.
📉 Three Rate Cuts Still Expected This Year?
Goldman Sachs predicts that rate cuts are still on the table. The investment bank expects the Fed to hold steady on July 30, but to follow with three consecutive cuts in the remaining FOMC meetings of the year. The rationale: a weakening labor market and declining consumer spending.
🔹 Private sector hiring has nearly "stalled"
🔹 Consumer spending has been slowing for six consecutive months
🔹 Job openings are down 65% from their March 2022 peak
📊 Kobeissi Letter: Labor Market Continues to Soften
Market analyst Kobeissi Letter echoed the call for rate cuts, pointing out further signs of labor market weakness. In the week ending July 11, job postings on Indeed fell 8% year-over-year—the lowest level since February 2021.
The report also revealed that job openings are now only 4% higher than pre-pandemic levels, compared to a 65% peak in March 2022. Given that a strong labor market had been a key argument against rate cuts, the tides may be turning.
🧠 Summary: Powell Faces Pressure on All Fronts
Trump is seizing on signs of economic slowdown to intensify criticism of Jerome Powell—targeting both his policy decisions and fiscal conduct. And while Trump stops short of calling for Powell’s removal, he clearly believes Powell’s time is running out. The outcome now hinges on economic data and the progress of the criminal investigation.
#TRUMP , #Powell , #USPolitics , #FederalReserve , #Fed
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