US President Donald Trump has continued his relentless pressure campaign on the Federal Reserve to cut interest rates, again calling the board to act as he says chairman Jerome Powell “just doesn't get it”.
“Our rate should be three points lower than they are, saving us $1 trillion per year (as a country). This stubborn guy at the Fed just doesn’t get it – never did, and never will. The board should act, but they don’t have the courage to do so!” Mr Trump wrote on the Truth Social media platform.
The latest post comes a week before the Federal Reserve's next meeting, where it is expected to continue its pause on rate cuts. The Fed has held rates steady at 4.25 to 4.50 per cent this year after easing policy by 100 basis points towards the end of 2024, owing to uncertainty surrounding Mr Trump's tariff agenda.
Mr Trump has repeatedly called for the Fed to lower rates to help service US debt, a concept known as fiscal dominance.
The Fed chairman has maintained a wait-and-see approach towards rates in defiance of Mr Trump's pressure campaign. Public remarks from other Fed officials indicate broad support to keep rates on hold next week, although Fed governor Christopher Waller – a Trump appointee and reported candidate to succeed Mr Powell – previewed a dissent from his colleagues last week by arguing the Fed should lower rates by 25 basis points.
As his anger over Mr Powell has increased, Mr Trump has expanded his line of attacks on the Fed chairman. Tensions reached a boiling point last week following reports that Mr Trump indicated to Republicans in Congress he was open to firing the Fed chairman. Mr Trump confirmed he brought up the idea, but said it was unlikely he would try to oust Mr Powell.
The most recent flashpoint centres on renovations at the Federal Reserve's headquarters in Washington, which have ballooned to roughly $2.5 billion.
White House deputy chief of staff James Blair, who has referred to the project as the “Taj Mahal on the National Mall”, said in a tweet that Trump officials were scheduled to visit the site on Thursday. The Fed released a virtual site visit on its website earlier this week.
Mr Powell has linked cost overruns to unforeseen conditions, such as more asbestos than anticipated, contamination in the soil and a higher-than-expected water table. The project was first approved by the Federal Reserve Board in 2017 and is subject to annual budget approval.
Still, some believe the White House could be using the Fed renovations as a pretext to fire Mr Powell. White House budget director Russell Vought said Mr Powell has “grossly mismanaged” the Fed, pointing to the renovation costs.
Fed officials can only be fired for cause, which is generally thought to be malfeasance or neglect of duty. The Supreme Court in May signalled that it would side with Mr Powell if Mr Trump were to fire him over a policy dispute.
Mr Powell has repeatedly said that he would never resign as Fed chairman before his term ends in May 2026. He has not said if he would continue his role as Fed governor, which runs into 2028.
Former PIMCO chief executive Mohamed El Erian broke from other prominent economists on Tuesday by suggesting Mr Powell should voluntarily step down as chairman to protect the Fed. Speaking at the World Bank, Mr El Erian questioned whether Mr Powell would expose the Fed to greater threats if he remained in his position.
“This tension between the President and the chairman of the Fed, if it continues, it will suck in more elements of the Fed,” Mr El Erian said when asked by The National, following a keynote address.
Top bankers have defended Mr Powell, however, with JPMorgan Chase chief Jamie Dimon last week saying interfering with the Fed “can have adverse consequences”.
Bank of America chief executive Brian Moynihan, Citigroup executive Jane Fraser, Goldman Sachs chief executive David Solomon and Carlyle Group co-founder David Rubenstein also came to Mr Powell's defence.
Treasury Secretary Scott Bessent told Bloomberg TV that he was “somewhat surprised” Egyptian-American Mr El Erian had called for Mr Powell's resignation.
Mr Bessent also repeated his call to conduct a review of Federal Reserve activities outside monetary policy, telling Bloomberg TV that “mission creep from the Fed is endangering their independence of monetary policy”.
“An internal review would be a good start. And if the internal review didn’t look like it was serious, then maybe there could be an external review,” said the Treasury Secretary.
Mr Bessent also said there is “no rush” to identify Mr Powell's successor as Fed chairman.
“There are a lot of strong candidates, including several who are on the main board and perhaps regional bank presidents,” he said.
The Federal Open Market Committee consists of the Fed chairman and the six other members of the Federal Reserve Board, the president of the New York Fed and four of the other 11 regional Fed banks that serve on a rotating basis.
Other than Mr Waller, the reported candidates to succeed Mr Powell include National Economic Council director Kevin Hassett, former Fed governor Kevin Warsh and Mr Bessent himself. The Treasury secretary said there's a “long, long list” of names to replace Mr Powell.
