By Andrea Shalal and Steve Holland
WASHINGTON (Reuters) -U.S. President Donald Trump renewed his criticism on Thursday of Federal Reserve Chair Jerome Powell, calling him a “fool” and complaining that the Fed is refusing to lower interest rates.
Trump has been on a virtual war path against Powell in recent weeks, threatening to fire him — and then backing away from that threat. He has repeatedly lashed out at Powell in posts on his social media site, calling him “a major loser” in one post.
Trump, speaking one day after the Fed, as financial markets had widely expected, kept its key borrowing rate unchanged, said cutting interest rates would be “like jet fuel” for the economy, “but he doesn’t want to do it.” He said Powell is “not in love with me.”
Early last week, in remarks suggesting that he is more knowledgeable about interest rates than Powell, Trump said he was not “a huge fan of” Powell.
The Fed this week kept short-term borrowing costs in the 4.25%-4.50% range, where they have been since December. While the big tariffs imposed by Trump are likely to increase both inflation and unemployment, the economy so far has shown little sign of either, Powell said on Wednesday, giving the central bank time to wait until there is more clarity on where tariffs actually end up and assess their effect on prices and jobs. At that point the Fed can act as needed, and potentially aggressively, he said.
Trump had a different view. “‘Too Late’ Jerome Powell is a FOOL, who doesn’t have a clue,” he wrote in a post on Truth Social on Thursday morning. “Oil and Energy way down, almost all costs (groceries and ‘eggs’) down, virtually NO INFLATION …”
Cutting interest rates typically boosts the economy, but in a time of above-target inflation, doing so could also unleash an upward spiral of price pressures that Powell has said must be avoided.
Trump named Powell as the Fed chair in 2018, during his first term in the White House, and Democratic President Joe Biden appointed Powell to a second four-year term in 2022.
Trump and British Prime Minister Keir Starmer on Thursday announced a “breakthrough deal” on trade, the first since Trump announced steep import levies on most U.S. trading partners on April 2 before subsequently pausing some of them to allow time to reach country-by-country deals.
That first glimmer of certainty amid what had been an increasingly foggy outlook makes the Fed actually less likely to cut rates aggressively. That was the read from financial markets, as traders pulled back Thursday from what had been overwhelming bets on a July start to interest rate reductions, with any more than three rate cuts by year’s end seen as increasingly unlikely.
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