Former President Donald Trump has intensified his criticism of Federal Reserve Chair Jerome Powell, following Powell’s recent remarks about the challenges facing the Fed in light of the president’s tariff plan. Trump even personally denounced Powell’s assertion. He thinks the Fed’s dual mandates of maximum employment and price stability are incompatible, and he is concerned that the president’s policies could fuel inflation.
In a recent press conference, Powell did admit the predicament the Fed is facing. He painted it as walking a “really difficult line” with the intent to juggle its objectives. He indicated that the imposition of tariffs by the Trump administration could lead to increased inflation in the near term. Powell acknowledged that such advancements could pose significant tests for the central bank. Sustaining such high rates of employment while achieving and maintaining price stability is a tall task.
I think that’s something that the president and his team will continue to look at’, says Kevin Hassett, a former economic advisor to Trump. He focused on the unintended impact of the tariff strategy.
Trump’s reaction to Powell’s remarks was yuge, quick and furious. He took to Truth Social to voice his discontent, declaring that “Powell’s termination cannot come fast enough.” The former president’s response was to go after Powell with an unusually sharp set of jabs, dubbing him “Too Late.” He claimed that with stronger Fed leadership, interest rates would be falling already.
“If we had a Fed Chairman that understood what he was doing, interest rates would be coming down too.” – President Donald Trump
The ex-president has repeatedly called for interest rates to be lowered, citing numerous other price deflations as rationale. The implication behind Trump’s comments is that the prevailing monetary policy under Powell is not conducive to booming economic growth.
In contrast to Trump’s pressure, Powell has repeatedly asserted that he cannot legally be fired by the president. “I intend to serve through the end of my term as chair in May 2026,” Powell stated previously, reaffirming his commitment to his role despite external pressures.
The tension between Trump and Powell represents a larger war over policy and policy execution. The Fed has a difficult task ahead. Yet, it’s only able to navigate outside economic policies, such as tariffs that endanger its dual mandate goals. Powell’s acknowledgment of this tension reflects a careful approach to navigating complex economic landscapes while adhering to legal mandates governing his position.
Even Senator Elizabeth Warren chimed in on the tragic state of affairs. She warned about what could happen if political interference leads to the wrong people running the Federal Reserve. Warren to Fed Chair Jerome Powell ⚠️ This is your warning. If the president fires you, American markets are in for deep instability. The impact could be catastrophic.
“If Chairman Powell can be fired by the president of the United States, it will crash markets in the United States.” – Sen. Elizabeth Warren
As the walls close in, Trump and Powell surely seem set in their ways. The result of this battle could have profound consequences on fiscal policy and congressional governance for years to come. The current debates over interest rates and tariffs are likely to remain on the tip of every policymaker’s tongue and economist’s pen.
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