Federal Reserve Chair Jerome Powell Faces Escalating Pressure from President Trump Over Interest Rates
Washington, D.C. – Federal Reserve Chair Jerome Powell is under mounting political and public pressure after President Donald Trump intensified his campaign for lower interest rates, criticizing the Fed’s decision to maintain its benchmark rate at 4.25% to 4.5% amid ongoing economic uncertainty.
On June 30, President Trump took the unusual step of sending Powell a handwritten note, which he then publicized on his Truth Social platform. In the note, Trump accused Powell of being “too late” and claimed that his policies have “cost the USA a fortune.” Trump argued that the U.S. is losing “hundreds of billions of dollars” due to high interest rates and insisted there is “no inflation” to justify the Fed’s stance. He pointed to countries like Switzerland and Japan, which have much lower rates, and suggested that the U.S. should target a rate as low as 0.5%.
During a White House press briefing, Press Secretary Karoline Leavitt displayed a copy of Trump’s note alongside a chart comparing global central bank rates. Leavitt emphasized the president’s business background and argued that Americans deserve more affordable borrowing costs. “The American people want to borrow money affordably, and they should have that opportunity; however, we are still facing interest rates that are excessively high,” Leavitt said.
Powell, speaking at the European Central Bank’s annual conference in Sintra, Portugal, on July 1, defended the Fed’s cautious approach. He reiterated that the central bank must carefully assess the economic impact of trade policies, particularly the inflationary risks posed by Trump’s tariffs, before making any rate cuts. “We’re simply taking some time,” Powell stated, emphasizing the Fed’s independence and its dual mandate of price stability and full employment.
The dispute has escalated further, with Trump calling for Powell’s resignation on July 2, citing alleged “deceptive” testimony regarding a $2.5 billion Fed headquarters renovation. Despite these attacks, Powell has maintained that the Federal Reserve will not be swayed by political pressure and will continue to focus on its statutory objectives.
Speculation about Powell’s future intensified after Treasury Secretary Scott Bessent suggested that a new Fed chair could be named as early as January 2026, when a board seat opens. Powell’s current term as chair ends in May 2026, though he could remain on the board until 2028.
The ongoing feud has raised concerns about the Federal Reserve’s autonomy. Global central bankers, including ECB President Christine Lagarde, publicly praised Powell’s resilience and commitment to central bank independence at the Sintra conference, highlighting the broader implications for monetary policy credibility worldwide.