Catenaa, Friday, August 01, 2025- US President Donald Trump on Friday called for the Federal Reserve’s board of governors to assume the power of Fed Chair Jerome Powell if rates are not slashed.
If Powell doesn’t “substantially” lower rates, “THE BOARD SHOULD ASSUME CONTROL, AND DO WHAT EVERYONE KNOWS HAS TO BE DONE!” Trump said through Truth Social.
The Fed has the responsibility of stabilizing prices and maximizing employment. Powell has held its benchmark rate for overnight loans constant this year, saying that Fed officials needed to see what impact Trump’s massive tariffs had on inflation.
Trump sees the rate cuts as leading to stronger growth and lower debt servicing costs for the federal government and homebuyers.
The President argues there is virtually no inflation, even though the Fed’s preferred measure is running at an annual rate of 2.6%, slightly higher than the Fed’s 2% target.
Trump has called for slashing the Fed’s benchmark rate by 3 percentage points, bringing it down dramatically from its current average of 4.33%.
The risk is that a rate cut that large could cause more money to come into the economy than can be absorbed, possibly causing inflation to accelerate.
The Supreme Court suggested in a May ruling that Trump could not remove Powell for policy disagreements. This led the White House to investigate whether the Fed chair could be fired for cause because of the cost overruns in its $2.5 billion renovation projects.
Powell’s term as chair ends in May 2026, at which point Trump can put his Senate-confirmed pick in the seat.
