US President Donald Trump, frustrated by the Federal Reserve’s refusal to lower interest rates, sent a pointed handwritten note to Chairman Jerome Powell on Monday. In the note, he criticised Powell for being “too late” and accused him of costing the US “a fortune” by not lowering rates sooner. Trump urged Powell to reduce the rates “by a lot!”
“Jerome, you are, as usual, too late.You have cost the USA a fortune and continue to do so. You should lower the rate by a lot!” he wrote.
Comparison to other countries’ interest rates
Along with his note, Trump included a memo listing interest rates in various countries such as Switzerland, Cambodia, Japan, Denmark, Seychelles and Thailand, where rates range from 0.25% to 1.75%. He argued that US rates should be in a similar range.
“Hundreds of billions of dollars being lost! No inflation,” Trump wrote to Powell.
Earlier this month, the Fed maintained interest rates at 4.25-4.50%, ignoring Trump’s calls for cuts. Though Trump initially threatened to replace Powell upon taking office, he now appears willing to wait until Powell’s term ends next May.
White House press secretary supports Trump’s position
At a recent White House briefing, Press Secretary Karoline Leavitt displayed Trump’s note and criticised Powell for cutting rates before the 2024 election but refusing to do so now, despite the economy being “in a much better place” due to Trump’s policies. She accused the Fed of politicisation and supported the president’s call for lower interest rates.
The Fed cut rates multiple times in 2024 as inflation cooled but has held steady since early this year. It anticipates two rate cuts later this year but has expressed concerns about slower growth and potential inflation increases.
Powell’s comments on tariffs and inflation
Chairman Powell noted that Trump’s tariffs on imports might cause short-term inflation and that the inflationary effects could be more persistent depending on tariff negotiations. Powell mentioned a July 9 deadline for deciding tariff rates.
Leavitt described the economy as booming, with decreasing inflation, rising stock markets and falling energy prices. However, she identified “high interest rates for the American people” as the remaining problem, stating, “The American people want to borrow money cheaply. And they should be able to do that.”