Recently, the financial sector in the United States has been stirred up again, as the conflict between President Trump and Federal Reserve Chairman Powell has intensified. Just a day earlier, Trump had just softened his attitude towards Powell, but on Wednesday, Eastern Time, he publicly accused Powell again, stating that maintaining interest rates at a high level is a major decision-making error, and he also revealed that he might call the central bank governor.
On Wednesday evening, Trump clearly stated during an executive action signing ceremony in the Oval Office: "I haven't called him yet, but I might. I think it’s a mistake for him not to lower rates; although the current performance of the U.S. economy is decent, the economy could develop even better if rates were lowered."
Looking back over the past few days, Trump's criticism of Powell has been fierce. He has publicly attacked Powell as "a major failure" and even stated, "the sooner he goes, the better." Although Powell was nominated by Trump to serve as the chairman of the Federal Reserve in 2017, the two have had ongoing disagreements on monetary policy and have publicly clashed multiple times since then. However, according to sources familiar with the situation speaking to CNN, after advisers warned Trump that firing Powell would have negative legal and economic consequences, Trump softened his stance on Tuesday, stating that he had "no intention" of firing Powell.
However, on Wednesday, Trump again "fired shots" at Powell, accusing him of political manipulation regarding the interest rate cut. Trump pointed out, "He has kept interest rates too high." At the same time, he criticized Powell for being too slow to raise rates during the early stages of the inflation crisis a few years ago, stating, "Historically, he has always been a step behind... He was recommended by someone I am not very satisfied with."
Trump and other White House officials hinted that the interest rate cuts taken by the Federal Reserve in the later stages of the Biden administration—though no cuts have occurred during Trump's term—might have political motives. However, this claim lacks supporting evidence, and the independent Federal Reserve has consistently emphasized that its monetary policy decisions are based on economic data and professional judgment, rather than political factors. Powell has also repeatedly strongly denied that political considerations influence the Federal Reserve's monetary policy decisions, stating that the Fed only makes decisions to raise or lower rates after careful study and analysis, and will not act hastily, nor will it conduct an emergency rate cut before the next scheduled policy meeting in May.
Trump also said, "I hope he makes the right decision—the right decision is to lower interest rates, so we'll see. I believe that as all tariff revenues begin to flow in, our situation will improve greatly. Our country will develop very well, and I hope he can (lower interest rates)... (After all) we currently have no inflation problem."
The series of disputes between Trump and Powell has sparked widespread attention and concern in the market. The stability of the U.S. financial market, as well as the future direction of monetary policy, is filled with uncertainty. Whether the Federal Reserve will lower interest rates as Trump wishes, and how the two sides will interact, undoubtedly becomes the focus of attention in the global economic field.#BTC
