Sharp Criticism Follows Economic Warning
Former President Donald Trump sharply criticized Federal Reserve Chair Jerome Powell on April 17, declaring on social media that “Powell’s termination cannot come fast enough.” The remark came just one day after Powell warned about the potential economic fallout of Trump’s tariff policies during a speech in Chicago.
Powell Cautions on Tariffs and Economic Outlook
Speaking to the Economic Club of Chicago on April 16, Powell noted that rising tariffs could lead to higher inflation and rising unemployment. “Unemployment is likely to go up as the economy slows, in all likelihood, and inflation is likely to go up as tariffs find their way and some part of those tariffs come to be paid by the public,” Powell said.
He outlined a potential dilemma for the central bank: balancing its goals of low inflation and a strong economy. While Powell emphasized the Fed’s commitment to maintaining price stability, he also acknowledged the need to respond to serious economic downturns if necessary.
Rate Cuts May Be Delayed
Powell suggested that the Fed may have to delay interest rate cuts if inflation remains a concern. However, he also noted the central bank would prioritize the most pressing economic issue—indicating the possibility of rate cuts if the U.S. economy were to enter or approach a recession.
Typically, the Fed lowers interest rates to stimulate economic growth during downturns, and raises them or keeps them elevated to combat inflation.
Trump Calls for Immediate Action
In response to Powell’s remarks, Trump took to social media to renew his criticism of the Fed’s policies. “He should have lowered Interest Rates… long ago,” Trump wrote. “But he should certainly lower them now.”
The former president has repeatedly voiced frustration over Powell’s approach to monetary policy, particularly during his time in office.
Fed Chair Reaffirms Independence
Powell defended the central bank’s independence in his speech, stating that the Fed makes decisions based on careful analysis, not political pressure. “People can say whatever they want. That’s fine. That’s not a problem,” Powell said. “But we will do what we do strictly without consideration of political or any other extraneous factors.”
A Strained Relationship
Powell was initially nominated by Trump and confirmed as Fed Chair in 2018. Despite the appointment, Trump often criticized Powell throughout his presidency, accusing the Fed of being too slow to cut rates. Powell was reappointed in 2022 for a second term.
Earlier this year, Trump again challenged the Fed’s decisions, claiming he understands interest rates better than the central bank.
In a previous press conference, Powell was asked whether Trump had the authority to fire him. While the issue remains complex, Powell’s emphasis on the legal foundation of the Fed’s independence signals his intention to stay the course regardless of political commentary.
