President Donald Trump intensified his criticism of Federal Reserve Chair Jerome Powell on Thursday, calling for an unprecedented 2.5 percentage point cut to interest rates and sharply attacking Powell’s leadership.
“‘Too Late’ Jerome Powell is costing our Country Hundreds of Billions of Dollars,” Trump wrote on Truth Social. “He is truly one of the dumbest, and most destructive, people in Government, and the Fed Board is complicit.”
“TOO LATE’s an American Disgrace!” he added.
If implemented, the rate cut Trump is demanding would represent a major break from traditional Federal Reserve policy. The central bank typically adjusts interest rates gradually, often in 0.25-point increments, carefully balancing inflation and employment concerns. In recent years, the Fed made 0.75-point hikes in 2022 to combat inflation and rapidly slashed rates during the early pandemic to cushion the economy.
Powell has consistently refrained from responding directly to Trump’s personal attacks, reiterating the Fed’s commitment to its dual mandate of controlling inflation while promoting maximum employment. When asked about Trump’s plan to replace him when his term expires next year, Powell remained focused on current priorities.
“From my standpoint, it’s not complicated,” Powell said. “What everyone on the [Federal Open Market Committee] wants is a good, solid American economy with strong labor market and price stability. That’s what we want. Our policy is well positioned right now to deliver that.”
“America’s economy has been resilient,” he continued. “Part of that is our stance. We think we’re in a good place on that, to respond to significant economic developments. That’s what matters. That is what matters to us. Pretty much that’s all that matters to us.”
Trump has long criticized Powell—whom he originally nominated—as being too slow to act on interest rates. His latest remarks mark one of the most aggressive attacks yet on a sitting Fed chair, adding new political pressure as economic and electoral stakes rise.
Federal Reserve officials have projected two quarter-point interest rate cuts in 2025, which would bring the federal funds rate down to roughly 3.75% to 4%. However, former President Donald Trump has dismissed that approach as inadequate.
“Europe has had 10 cuts, we have had none. We should be 2.5 Points lower, and save $BILLIONS on all of Biden’s Short Term Debt,” Trump said. “We have LOW inflation!”
(Note: The European Central Bank has actually reduced rates eight times in the past year, not ten.)
Although inflation in the U.S. has remained subdued, Fed Chair Jerome Powell warned that prices could start climbing again in the months ahead. As companies move through inventory that was imported before new tariffs took effect, consumers may soon feel the impact of those added costs.
“We’ve had goods inflation just moving up a bit,” Powell said Wednesday. “We do expect to see more of that over the course of the summer. It takes some time for tariffs to work their way through the chain of distribution to the end consumer. A good example of that would be goods being sold at retailers today may have been imported several months ago before tariffs were imposed.”
Powell also pointed out that many businesses are preparing to pass those additional tariff costs along to customers. Still, he emphasized that there are too many unknowns right now to justify lowering rates further.
“Today, the amount of the tariff effects — the size of the tariff effects, their duration and the time it will take are all highly uncertain,” he said. “So that is why we think the appropriate thing to do is to hold where we are as we learn more. And we think our policy stance is in a good place where we’re well-positioned to react to incoming developments.”
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