🔹 May 29 — White House Showdown
For the first time since returning to office, President Trump met face-to-face with Federal Reserve Chair Jerome Powell at the White House. The highly anticipated meeting came as inflation cools — but political heat rises.
🔹 Trump’s Message: Cut Rates, Compete with China
Trump called on the Fed to slash interest rates, arguing that with inflation nearing 2.2%, the U.S. is being “held back” by Powell’s cautious stance. He believes lower rates are essential to stimulate growth, fight the impact of high tariffs, and keep America ahead of China.
"We're at a disadvantage if we don’t act," Trump told Powell, according to White House insiders.
🔹 Powell Holds the Line — For Now
But Powell didn’t flinch. He stood by the Fed’s independent role, saying decisions will be driven by economic data, not politics. He also warned that Trump’s tariff policies may actually increase inflation, requiring careful monitoring before cutting rates.
Powell: “The Fed's job is price stability and full employment — not politics.”
🔹 Background: A Long Battle Over Rates
Trump and Powell have clashed for years. Though Trump nominated Powell in 2017, he quickly turned against him for raising interest rates. Now in his second term, Trump is again pressuring the Fed publicly and privately, even floating names like Kevin Warsh as possible replacements.
🔹 The Tariff Domino Effect
Trump’s new “reciprocal tariffs” — ranging from 10% to 60% — are already hitting American consumers. Yale economists estimate they could cost the average U.S. household $4,900 a year. Inflation may rise again later in 2025 as these effects ripple through supply chains.
🔹 Markets on Edge
Wall Street wobbled after the meeting. Stocks dipped on fear of political interference, then bounced back as investors focused on cooling inflation. But the rate cut debate is far from over.
🔹 Fed Independence in the Crosshairs
With Trump openly discussing Powell’s removal earlier this year (before later backtracking), concerns are growing about the Fed’s independence. Analysts warn that any move to politicize the central bank could undermine global trust in the dollar — and even threaten its reserve status.
Taihe Institute: “Undermining Fed independence could crack the dollar’s foundation.”
🔹 What’s Next: June Rate Meeting & Market Watch
The Fed meets again in June. Most expect rates to stay flat, but markets will be watching Powell’s comments — and the “dot plot” — for signs of change.
🔍 Bottom Line
Trump wants fast growth and lower rates. Powell wants data-driven decisions and independence. Their tug-of-war is now front and center — and the outcome could shape U.S. monetary policy, inflation, and the global role of the dollar for years to come.
