US President Donald Trump on Friday once again urged the Federal Reserve to cut interest rates. In a social media post, Trump criticised Fed Chair Jerome Powell, calling him a “numbskull”. He admitted his harsh words may be making it harder for Powell to act.
“I fully understand that my strong criticism of him makes it more difficult for him to do what he should be doing, lowering Rates, but I’ve tried it all different ways. I’ve been nice, I’ve been neutral, and I’ve been nasty, and nice and neutral didn’t work!”
Fed official signals July rate cut
Trump’s post came on the same day Christopher Waller, a member of the Federal Reserve’s Board of Governors, suggested that the Fed could cut interest rates as early as July. “We’re in a good spot right now for talking about bringing the rate down,” Waller said.
For months, Trump has slammed Powell for not cutting rates fast enough, arguing that high interest costs are burdening the federal government. However, the Fed doesn’t set rates based on government debt. Instead, it focuses on employment and stable prices, its two main goals given by Congress, according to a report by CNN.
Chair Jerome Powell has made it clear that the Fed is closely watching how Trump’s economic policies, including tariffs, affect the economy before making any big decisions. Other Fed officials have echoed this cautious approach.
Are tariffs fueling inflation?
While Trump’s tariffs haven’t led to major inflation yet, some economists believe price rises could come soon. But Waller believes the inflation from tariffs would likely be temporary and shouldn’t stop the Fed from acting, the report mentioned.
“These type of price shocks… will likely only result in a one-off increase in inflation,” Waller said.
Labour market showing weakness
Waller pointed to signs that the job market is weakening, such as higher youth unemployment. He believes that’s reason enough to lower interest rates soon.
“Maybe the labor market is starting to soften more than we might want it to… so you’re starting to worry about the downside risks to the labor market,” he said. “Move now, don’t wait.”
Trump’s harsh words come as he considers who will replace Powell when his term ends in May 2026. He said a decision could come soon.
“Maybe, just maybe, I’ll have to change my mind about firing him? But regardless, his Term ends shortly!” Trump said.
Waller, who was appointed by Trump in 2020, is now seen as one of the top contenders to replace Powell. Others reportedly being considered include former Fed Governor Kevin Warsh and Treasury Secretary Scott Bessent.
If Trump announces his Fed pick soon, that person could become the “shadow” Fed chair, something that has never happened before. Traditionally, presidents wait until a Fed chair’s term is nearly over to name a successor.
While Waller is open to rate cuts soon, he isn’t backing the large cuts Trump has demanded. He believes the Fed should act slowly and carefully.
“Start slow,” Waller said, adding that waiting until the job market crashes would be a mistake. “Why do we want to wait until we actually see a crash before we start cutting rates?”
