President Donald Trump on Tuesday brought back his criticism of the Federal Reserve’s leadership for not cutting interest rates amid its concerns about inflation, which remains above the central bank’s target range.
Trump criticized Fed Chair Jerome Powell in a Truth Social post, arguing that he’s behind the curve in lowering interest rates when compared with America’s peers.
“No Inflation, and Prices of Gasoline, Energy, Groceries, and practically everything else, are DOWN!!! THE FED must lower the RATE, like Europe and China have done,” Trump wrote on his Truth Social platform. “What is wrong with Too Late Powell? Not fair to America, which is ready to blossom? Just let it all happen, it will be a beautiful thing!”
Trump has lobbied Powell and the Fed more broadly to lower interest rates to boost the economy and potentially offset price hikes stemming from his tariffs on imported goods. However, the Fed has signaled it will wait to cut interest rates until there are either signs of inflation returning to its 2% target or a weakening in the labor market.
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The central bank has held the benchmark federal funds rate steady at a range of 4.25% to 4.5% at its last three meetings.
Trump’s remarks followed the Bureau of Labor Statistics’ release of the April consumer price index (CPI), an inflation gauge that showed overall prices were up 2.3% from a year ago, while core prices that exclude more volatile energy and food prices were up 2.8% on an annual basis.
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Another inflation metric favored by the Fed, the personal consumption expenditures (PCE) index, was up 2.3% from a year ago through the month of March.
Economists have warned that Trump’s tariffs, which are taxes on imported goods, are likely to cause consumer prices to rise in the months ahead, potentially causing a resurgence of inflation and delaying the Fed’s plans to cut rates. That’s because tariffs are paid by U.S. importers, who typically pass most of their higher costs from tariffs on to consumers through higher prices.
Trump has previously threatened to fire Powell, though there is uncertainty over his legal ability to do so, and he has since said that he won’t attempt to remove him from the central bank. The Fed is an independent federal agency, and current law prohibits removing the chair except for cause.
Goldman Sachs recently released a report that found, “Economic commentators broadly agree that more politically independent central banks are better able to balance their goals of maintaining low and stable prices while keeping economic output near full potential.”
The analysis found that reduced independence of central banks like the Federal Reserve can lead to higher inflation, reduced stock prices and a weaker currency.
