Trump Urges Fed Board to Override Powell on Interest Rates

President Donald Trump on Friday urged the Federal Reserve's board of governors to assume control from Chair Jerome Powell, expressing frustration over the central bank's decision not to cut short-term interest rates. Trump made the comments on his Truth Social platform, describing Powell as "stubborn" and calling for the board to act if rates are not "substantially" lowered.

The Federal Reserve has kept its benchmark interest rate steady this year, with Powell stating that officials are monitoring the impact of recent tariffs on inflation. Two Fed governors, Christopher Waller and Michelle Bowman, both nominated by Trump, issued statements on Friday suggesting that tariffs would have only a one-time effect on prices and that the job market is likely softening. They dissented at the Fed's recent meeting, advocating for modest rate cuts, though not as significant as those sought by Trump.

Despite previously touting strong economic growth, Trump welcomed the dissent from Waller and Bowman, writing, "STRONG DISSENTS ON FED BOARD. IT WILL ONLY GET STRONGER!" in a separate post. The latest jobs report showed a slowdown in hiring, with 73,000 jobs added in July and downward revisions for previous months.

Trump has argued that deeper rate cuts would support economic growth and reduce borrowing costs, maintaining that inflation is low. However, the Fed's preferred inflation measure is currently at 2.6%, above its 2% target. Trump has called for a dramatic reduction in the benchmark rate by 3 percentage points, a move that some analysts warn could risk higher inflation.

A recent Supreme Court ruling indicated that Trump cannot remove Powell over policy disagreements. The White House has since explored whether Powell could be dismissed for cause related to cost overruns in the Fed's renovation projects. Powell's term as chair runs through May 2026, after which a new appointment could be made.