President Donald Trump is back on the attack, aiming his fire at Federal Reserve Chair Jerome Powell. This time, he wants a bold move — a full percentage point rate cut. But here’s the twist: he’s making that demand right after a stronger-than-expected jobs report. The May jobs report showed nonfarm payrolls rising by 139,000, beating estimates of 125,000. That’s usually a sign of a healthy economy, not one in need of emergency stimulus. Still, Trump called the economy “great” and insisted that lower rates would be “Rocket Fuel.” He compared the U.S. to Europe, where the European Central Bank just made its eighth rate cut since last June. Trump believes Powell is holding America back. He warned that waiting too long would cost the country money. As usual, he didn’t hold back on insults, calling Powell “Too Late” at the Fed.
Why the Fed Isn’t Rushing to Cut
The Federal Reserve has stayed cautious for good reason. Yes, inflation has been cooling, but Powell and other policymakers aren’t convinced it’s under control yet. They also worry that Trump’s own tariffs might drive prices back up. The central bank wants to avoid cutting rates too soon. After all, its main goal is to keep inflation near 2% and employment strong. A sharp rate cut could overheat the economy and spark inflation again. Historically, the Fed moves slowly — usually in quarter-point steps. The last full-point rate cut came during a true crisis: the COVID-19 crash in March 2020. Before that, it was the Great Recession of 2008. Right now, the data doesn’t show the same kind of emergency.
Rate Cut Demand Ignores Fed’s Usual Playbook
Trump’s call for a full-point rate cut is rare and aggressive. That kind of move usually signals economic panic, not strength. Yet, he’s calling for it during a time of job growth and stable inflation. It’s a risky request. The Fed doesn’t typically act on political pressure. It’s designed to operate independently, free from White House influence. Powell has made that clear in past statements. The central bank’s credibility relies on staying focused on the economy, not politics. Still, Trump’s public attacks may stir up markets. Traders had been expecting a rate cut in September, but odds dropped after the jobs report came out. Now, only a 62% chance remains for a cut by fall, down from 74%.
Why a Rate Cut Now Might Backfire
Cutting rates when the economy is strong could cause more harm than good. It may boost borrowing and spending too much, heating up inflation. That would force the Fed to raise rates again — fast and hard. It’s a cycle they want to avoid. Trump argues that a cut would help lower borrowing costs on existing debt. But Powell and his team are thinking long-term. Their cautious stance aims to keep growth steady and inflation in check. If inflation picks up again, the Fed will have less room to maneuver. That’s why Powell is playing it safe. Jumping into a big rate cut now could put that balance at risk.
Markets Say No to a Big Rate Cut — For Now
Despite Trump’s pressure, markets don’t expect the Fed to make a bold move. The chances of a full percentage point cut anytime soon are near zero. In fact, traders see just a 22% chance of more than two cuts by the end of 2025. Powell’s team is looking at the data, not the noise. Strong job numbers, solid wage growth, and cooling inflation are not signs of crisis. They’re signals to stay the course. Trump may keep pushing, especially as the election draws closer. But for now, the Fed’s focus is clear: steady hands, not shock moves. Powell won’t act just because the president says “Go for a full point.” And unless the economy sours fast, that rate cut will have to wait.