The US president has repeated his attacks on the Federal Reserve chairman this week. Donald Trump is getting impatient, as the central bank still doesn’t seem ready to cut interest rates. What are the reasons for these opposing views?
Tensions between Jerome Powell and Donald Trump at an all-time high
Tensions between Jerome Powell, the chairman of the US Federal Reserve, and Donald Trump are growing. While the US president has threatened to find a way to fire him, Jerome Powell has stood his ground: no interest rate cuts for now.
A new decision will be made tonight by the Federal Reserve, and until then, Jerome Powell is not expected to announce a cut. His stance infuriates Donald Trump, who reiterated his attacks on the Fed chairman a few days ago. He believes that the decision could cost the United States $600 billion:
What is at stake behind this conflict between the president and the Fed
For Donald Trump, there are multiple issues at stake. A cut in interest rates would lead to more spending and investment, which would appear to boost the economy. It would also help the financial markets while reducing the cost of government debt. These are therefore key issues, especially in an election year for the Trump administration.
Conversely, Jerome Powell believes that the signals are not clear enough: he fears that an interest rate hike could cause inflation to rise again. Behind this, there is also criticism of Donald Trump’s tariffs: the Fed chairman has already expressed his concerns about them, pointing to a risk of destabilization.
This is indefensible for the US president, who said a few days ago, “I may have to do something” about Jerome Powell. However, it should be remembered that the US president has no direct power over the Fed chairman. One thing is certain: tensions do not seem likely to ease anytime soon.
