President Trump on Thursday criticized Federal Reserve Chair Jerome Powell for holding interest rates steady at the Fed’s May 7 meeting, calling him a “fool” for acting “too late” in cutting the central bank’s benchmark rate.
Mr. Trump’s post on his Truth Social app is the latest in a string of criticisms he’s launched at Powell for holding rates steady this year. Meanwhile, the Bank of England on Thursday cut its main interest rate by a quarter of a percentage point to 4.25% amid concerns over the potential shock to global growth emanating from the tariff policies of the Trump administration.
The Federal Reserve’s last rate cut was made in December 2024, when the central bank lowered the rate to a range of 4.25% to 4.50%, where it still stands.
In a press conference yesterday, Powell articulated the Fed’s reasoning for holding steady, including that economic data — for now — shows that the U.S. is in relatively good shape. The Fed chair also noted that its policymakers want to hold off on making any moves until the effects of Mr. Trump’s economic policies become clearer, such as the impact of his broad tariffs on inflation and economic growth.
Mr. Trump on Thursday inaccurately claimed there is “virtually NO INFLATION.” Inflation rose 2.4% on an annual basis in March, which reflects a cooler pace than in the prior months yet is still above the Fed’s stated goal of reaching a 2% annual pace.
“Oil and Energy way down, almost all costs (groceries and ‘eggs’) down, virtually NO INFLATION, Tariff Money Pouring Into the U.S. — THE EXACT OPPOSITE OF ‘TOO LATE!’ ENJOY!,” Mr. Trump wrote in his Thursday post.
Powell has sought to stress the Federal Reserve’s independence, noting in December that insulating the Fed from political influence is “for the benefit of all Americans,” allowing it to make decisions based on economic data rather than at the behest of elected officials.
The Fed’s independence allows it to pursue its dual mandate — to keep inflation low and the labor market at full employment — without pressure from elected officials, economists say. Nations with central banks that move interest rates at the whim of politicians tend to have inflation spikes and other economic troubles, experts have noted.
“There’s virtual unanimity among economists that monetary independence from political interference, that the Fed or any central bank be able to do the job that it needs to do, is really important,” Austan Goolsbee, Chicago Federal Reserve Bank president, said in an April interview with CBS News’ “Face the Nation with Margaret Brennan.”
Mr. Trump’s repeated pressure on Powell to lower rates could have the opposite effect, noted Will Denyer of investment advisory firm Gavekal Research.
The Fed “must avoid any appearance of bowing to Trump’s pressure for rate cuts, which would further undermine shaky confidence in U.S. policymaking and the U.S. dollar,” he wrote in a May 6 research note. “The risk is that Trump has created an environment that forces Powell to move very cautiously going forward. By calling Powell ‘Mr. Too Late,’ the President may have created a self-fulfilling prophecy.”
