Trump Pressures Fed for Rate Cuts; Powell Stands Firm Amid Inflation Concerns During May Meeting

Former President Donald Trump has urged the Federal Reserve to cut interest rates during its May policy meeting, using social media and interviews to press his case. Despite this, Fed Chair Jerome Powell plans to maintain current rates, citing inflation and a strong labor market. Trump, who previously suggested he might remove Powell, has denied any intention to do so before Powell's term ends in 2026. The Fed is expected to keep rates steady, with potential cuts anticipated later in the year, amid concerns about tariffs and economic uncertainty.

Trump Presses for Immediate Rate Cuts

In recent days, Donald Trump has repeatedly called on the Federal Reserve to cut interest rates, using his social media platform Truth Social and televised interviews to amplify his demands. On May 2, Trump posted that the Fed should act immediately, stating, “Powell’s termination cannot come fast enough!” He also referred to Powell as “Mr. Too Late” and a “major loser,” accusing him of delaying necessary monetary easing.

During an interview aired on NBC’s “Meet the Press” on May 4, Trump reiterated his position, saying, “He should lower them. And at some point, he will. He’d rather not because he’s not a fan of mine.” Trump added that Powell “is a total stiff” and claimed that the Fed chair’s reluctance to cut rates was personal rather than data-driven.

Despite the harsh rhetoric, Trump clarified that he does not intend to remove Powell from his position. “No, no, no. That was a total — why would I do that? I get to replace the person in another short period of time,” he said, referring to Powell’s term ending in May 2026.

Powell Holds Firm Amid Political Pressure

Federal Reserve Chair Jerome Powell has maintained a cautious stance in the face of Trump’s public pressure. Speaking ahead of the May 6–7 Federal Open Market Committee (FOMC) meeting, Powell emphasized the Fed’s commitment to its dual mandate of price stability and maximum employment.

Recent economic indicators have supported the Fed’s decision to hold rates steady. The U.S. economy added 177,000 jobs in April, and inflation, while easing slightly, remains above the Fed’s 2% target. Powell and other Fed officials have expressed concern that recent tariff increases imposed by the Trump administration could reignite inflationary pressures.

“We are in a wait-and-see mode,” Powell said in his most recent public remarks. “The labor market remains strong, and inflation is still elevated. We need to assess the full impact of recent policy changes, including tariffs, before making any adjustments.”

Fed Governor Chris Waller echoed this sentiment, stating that a rate cut is unlikely before July due to the 90-day pause on reciprocal tariffs. “I don’t think you’re going to see enough happen in the real data in the next couple of months,” Waller said.

Fed Expected to Hold Rates Steady

Market analysts widely expect the Fed to keep its benchmark interest rate unchanged at the current range of 4.25% to 4.5% during this week’s meeting. According to futures pricing, investors anticipate the first rate cut may come in July, with one or two additional cuts possible by the end of the year.

However, the Fed’s internal projections suggest a more conservative path. The midpoint of the target level for the federal funds rate is forecasted to be 4.0% by the end of 2025, indicating fewer cuts than markets expect.

Economists note that Trump’s vocal criticism may complicate the Fed’s decision-making process. “Trump’s badgering of Powell makes it harder for the Fed chair to cut rates because doing so anytime soon would be seen as knuckling under to the White House,” said Preston Mui, an economist at Employ America.

Trump Denies Plans to Remove Powell

Despite earlier comments suggesting he could remove Powell, Trump has now issued his most definitive denial. In the NBC interview, he stated, “Why would I do that? I get to replace the person in another short period of time.” This statement appears to be an effort to reassure markets and quell speculation about the Fed’s independence.

Trump originally appointed Powell as Fed chair in 2018. Since then, their relationship has been marked by frequent public clashes over monetary policy. Trump has consistently advocated for lower interest rates, arguing that they would stimulate economic growth and counteract the effects of his administration’s tariff policies.

In contrast, Powell has emphasized the importance of data-driven decision-making and the need to maintain the Fed’s credibility and independence. “We are not driven by political considerations,” Powell has said in past statements. “Our decisions are based on economic data and our mandate from Congress.”

Economic Outlook Remains Uncertain

The broader economic outlook remains clouded by uncertainty, particularly due to the impact of tariffs and global trade tensions. While the labor market remains strong, the first quarter of 2025 saw weaker-than-expected GDP growth. Trump has attributed the slowdown to policies enacted by President Joe Biden, while taking credit for any signs of economic strength.

The Fed is also monitoring inflation expectations, which some officials fear may be loosening. Richmond Fed President Thomas Barkin and Fed Governor Adriana Kugler have both voiced concerns about the potential for inflation to reaccelerate, especially in light of rising import duties.

As the Fed concludes its policy meeting, all eyes will be on Powell’s post-meeting press conference, where he is expected to address the central bank’s outlook and respond to questions about political pressure and the path forward for interest rates.

References

• US Federal Reserve likely to defy President Trump, keep rates unchanged this week
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