Trump Fires Again: Slams Powell as "Terrible," Demands Benchmark Rate Cut to 1%"

TradingKey - U.S. President Donald Trump has ramped up his criticism of Federal Reserve Chair Jerome Powell. On Monday (July 14), he lashed out at Powell once again at the White House for not cutting interest rates.

Donald Trump: We have a bad head of the Federal Reserve, a very bad one… I tried to be polite with him. It doesn’t help. He’s a real fool. No, he truly is a fool. A stupid person. That’s for sure.

The current federal funds rate target range stands at 4.25% to 4.50%. To reach Trump’s desired level, the Fed would need to cut rates by at least 300 basis points. However, economists point out that such low rates are typically only seen during severe economic downturns — often accompanied by unemployment rates above 6%.

At the same time, a new round of clashes has emerged between the Trump administration and Powell over renovation costs at the Fed’s headquarters. Earlier, Senator Tim Scott questioned the expenses during a hearing, prompting Powell to respond that no luxurious facilities were involved.

Russell Thurlow Vought, Director of the Office of Management and Budget, criticized Powell last week for poor management and suggested he may have misled Congress on the renovation issue. Bill Pulte, Director of the Federal Housing Finance Agency, went even further, accusing Powell of giving false testimony — an offense he argued could justify removal from office.

In response to the mounting criticism, the Federal Reserve said last Friday that cost overruns were mainly due to design changes, inflationary pressures, and unexpected circumstances. It also emphasized that the project remains under strict oversight.

Analysts believe that the recent attacks by multiple Trump administration officials on the Fed’s headquarters renovation are part of a broader effort to build a justification for Powell’s potential dismissal.

Deutsche Bank noted that Trump’s intensifying assault on Powell could further undermine the independence of the Federal Reserve, likely triggering intensified selling pressure on U.S. dollar assets.

Market expectations currently price in a 95.7% probability that the Fed will hold rates steady in July, with only a 4.3% chance of a 25-basis-point cut. Investors should remain alert to potential market volatility driven by shifting expectations around monetary policy.

【July Fed Rate Cut Outlook, source: Investing.com】