TLDR
- President Donald Trump accused Jerome Powell of delaying a Fed rate cut for political reasons.
- Trump stated that he has no plans to fire Powell but noted his term ends in 2026.
- He criticized the Federal Reserve for keeping interest rates high despite signs of economic slowdown.
- Trump also targeted Powell over the high renovation costs at the Federal Reserve.
- Representative Anna Paulina Luna has referred Powell to the Department of Justice over perjury allegations.
President Donald Trump has blamed political motives for the Federal Reserve’s delay in reducing interest rates. He suggested that Chair Jerome Powell’s refusal to implement a Fed rate cut stems from more than economic strategy. However, Trump emphasized that he would not remove Powell but hinted at his eventual departure when his term ended in 2026.
Trump made these comments during a joint appearance with the Philippine president at the White House. He accused Powell of keeping rates high despite clear signals that the economy requires lower rates. The president insisted that interest rates should be at 1% given current economic conditions.
Although the economy remains resilient, Trump believes Powell’s reluctance to approve a Fed rate cut threatens progress. He raised concerns over the Fed’s strategy, claiming that the central bank should act sooner. Still, he clarified that firing Powell is not an option at this point.
Trump Criticizes Powell’s Inaction and Fed Renovation Dispute
Trump also attacked Powell over the cost of renovations at the Federal Reserve building, calling the expenses unnecessary and excessive. This controversy has gained attention in Congress, where Rep. Anna Paulina Luna has referred Powell to the Department of Justice. The referral involves allegations of perjury connected to the renovation’s budget details.
As scrutiny grows, discussions have emerged around the possibility of Powell resigning before his term concludes. If Powell steps down, a new appointment could enable the administration to secure a Fed rate cut more quickly. The case’s legal implications may further pressure Powell as lawmakers examine the renovation controversy.
Trump also noted that if any fraud charge is proven, Powell might leave office before 2026. This would allow a new chair to act swiftly on monetary easing. Political friction continues to surround Powell as speculation builds over his future at the central bank.
Labor Market Weakness Increases Pressure for Fed Rate Cut
Goldman Sachs has projected three consecutive Fed rate cuts at the year’s remaining FOMC meetings following July’s expected rate hold. The firm attributes the anticipated policy shift to a declining labor market and prolonged weak consumer spending. The next scheduled FOMC meeting is on July 30.
Analysts highlight that private hiring has slowed sharply and is approaching levels last seen during economic stagnation periods. The labor market’s fragility suggests reduced demand, aligning with earlier indicators of a broader economic slowdown. Goldman Sachs expects that these patterns will force the Fed’s hand.
Meanwhile, job listings on Indeed have fallen 8% year-over-year, reaching a low not seen since early 2021. Market observer The Kobeissi Letter emphasized this drop as consistent with recessionary behavior. Weaker employment data continues to support the case for an immediate Fed rate cut.
