President Trump renewed his attack on Federal Reserve chairman Jerome Powell Thursday for not cutting interest rates, even as Trump's own trade war makes rate cuts more difficult.
In a social media post, Trump complained that Powell is "always TOO LATE AND WRONG," and he insisted the Fed chairman's "termination cannot come fast enough!"
The president was evidently frustrated that the European Central Bank was preparing to lower interest rates for the seventh time, while the Federal Reserve is in a holding pattern. Of course, European leaders have not imposed triple-digit tariffs which threaten to rekindle inflation.
Trump's post came a day after Powell warned that the tariffs from the Trump administration are likely to cause both higher prices and slower economic growth.
"Tariffs are highly likely to generate at least a temporary rise in inflation," Powell told the Economic Club of Chicago, noting that Trump's import taxes were higher than most forecasters had expected. "The inflationary effects could also be more persistent."
As a result, Powell said, the central bank is "well positioned to wait for greater clarity" before considering any reduction in interest rates.
Powell intends to serve out his term
In his social media post, Trump called Powell's report a "complete mess," arguing "Oil prices are down, groceries (even eggs!) are down, and the USA is getting RICH ON TARIFFS."
While oil prices have fallen in response to fears of a global economic slowdown, grocery prices actually rose last month, according to the latest inflation report from the Labor Department. Egg prices jumped nearly 6% between February and March, thanks to the lingering effects of bird flu.
The back and forth is part of a long-running dispute between the president and the Fed chair, whom Trump nominated for that post during his first term in the White House.
Trump has frequently criticized the central bank for not keeping interest rates lower. The Fed is designed to operate independently of that kind of political pressure, so it can make the unpopular decisions necessary to fight inflation.
Powell has tried to avoid antagonizing the president, often ducking questions about Trump's commentary. But he's also been adamant that he intends to serve out the remainder of his term, which runs through May of next year.
Powell insists the president does not have the authority to fire him, except for "cause," meaning some kind of bad behavior. Current Supreme Court precedent supports that view. But the White House has signaled a willingness to test that standard, firing board members of other independent agencies.
Powell said on Wednesday that lawmakers from both parties have generally defended the Fed's ability to set interest rate policy without interference. But that doesn't mean there isn't grumbling.
"We are blessed with a large number of amply-compensated critics," Powell said.
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