Trump Eager for 'Termination' of Fed Chair Powell Over Pace to Cut Rates

What Happened?

President Donald Trump heavily criticized Federal Reserve Chair, Jerome Powell, Thursday, after reiterating frustrations that interest rates are not being cut quickly enough.

In a post on Truth Social, President Trump hinted at the possibility of firing Powell despite his term not expiring until May 2026.

He pointed to the European Central Bank's expectations to cut interest rates for the seventh time as a basis for the Fed to make a move.

'Oil prices are down, groceries (even eggs!) are down, and the USA is getting RICH ON TARIFFS,' Trump stated. '(Powell) should have lowered Interest Rates, like the ECB, long ago, but he should certainly lower them now.'

Trump added, 'Powell’s termination cannot come fast enough!'

These remarks come one day after Powell announced Wednesday, that the central bank will 'wait for greater clarity' before considering future interest rate cuts.

Officials are increasing their predictions regarding economic uncertainty amid Trump’s policy changes and his moves around tariffs.

Powell told audience members at the Economic Club of Chicago that he expects Trump’s tariffs to generate 'higher inflation and slower growth.'

Why it Matters

Recently released data revealed U.S. consumer sentiment declined in April, as many now worry about the chances of an economic recession.

It marked the second-lowest reading on records going back to 1952.

Powell stated a dilemma for the Fed about cutting interest rates, is the unpredictable trends that Trump has presented with tariffs.

Although the Fed holds an obligation to keep prices stable while maximizing employment, they find themselves faced with a challenging scenario.

Some experts have stated that if the Fed raises interest rates to protect against tariff-induced inflation, it risks stifling borrowing and slowing the economy further.

Trump suspended universal tariffs for 90 days and maintained a 10% blanket duty on almost all U.S. imports.

Automotives, steel, and aluminum levies of 25% were also kept in place.

Countries like China have hiked their levies to 125% on U.S. imports, effectively shutting out the U.S. in a major trade escalation.

The ongoing battle between the U.S. and China threatens to rip apart trade ties between the world’s two largest economies.

Treasury Secretary Scott Bessent and others reportedly believe that the Fed should still leave many options open.

How it Affects You

The increased likelihood of a 2025 recession has consumers and business owners concerned about the U.S. outlook.

The shock from Trump's pursuit to rectify trade practices could potentially drive growth in the U.S. down by two percentage points this year.

Powell reiterated that it would take a bipartisan effort to address and tackle a more than $1.3 trillion budget deficit.

Although The Federal Reserve Act grants the central bank a measure of independence, the federal law still allows the president to remove a Fed chair 'for cause.'

It's a tough road for President Trump and Fed Chair Powell to work together on their relationship to address the issues ahead.