U.S. President Trump announced during an interview on June 6 that the appointment result for the next Federal Reserve Chair will be announced soon. He indicated that he has a fairly clear understanding of the candidate, who is widely respected. Trump also again pressured the current Federal Reserve Chair Powell to lower rates by a full percentage point. He referred to Powell as 'Mr. Too Late' on social media, criticizing him as a disaster and pointing out that Europe has made ten rate cuts while the U.S. has not made any. Powell's term as Federal Reserve Chair will end in May 2026, and Trump is considering a successor nearly a year in advance, reigniting speculation about changes in the Federal Reserve's leadership.
Trump urges the Federal Reserve to make significant rate cuts
Trump posted on social media that the Federal Reserve should directly cut rates by one percentage point. He believes inflation is almost nonexistent, and if inflation returns, it can be addressed by raising rates. Trump accused Powell of maintaining the current rate level, causing significant damage to the country, stating that the current rates have increased the borrowing costs for the federal government.
A one percentage point rate cut is relatively rare globally; central banks typically limit rate adjustments to within 25 basis points, except during crises. The last time the Federal Reserve cut rates by one percentage point was in March 2020 during the COVID-19 pandemic. Prior to that, the Federal Reserve also cut rates by one percentage point during the financial crisis in December 2008. Trump stated that if the Federal Reserve cuts rates, the U.S. could significantly lower both long-term and short-term debt rates.
The candidate for Federal Reserve Chair is about to be announced
Former Federal Reserve Governor Kevin Warsh is considered a top candidate for Trump's next Federal Reserve Chair. When asked about Warsh, Trump responded that he is highly regarded. Recently, Warsh publicly stated at a forum that the Federal Reserve is too large, too involved in the market, and lacks political immunity. He supports Trump's criticism of the Federal Reserve's authority, emphasizing that the central bank should not be treated like a pampered prince.
Warsh stated that if the president believes the Federal Reserve is not doing well, he should speak up. This statement comes against the backdrop of Trump having just met with Powell at the White House, marking the first face-to-face meeting since Trump returned to the White House. The White House stated that Trump again urged the Federal Reserve to cut rates, while the Federal Reserve claimed Powell insists on independently setting monetary policy. Trump has long had conflicts with Powell over interest rates, consistently criticizing the Federal Reserve for maintaining high rates, believing this suppresses the economy and the stock market.
