Trump demands the Fed cut interest rates by a full percentage point

President Donald Trump is demanding that the Federal Reserve slash interest rates by a full percentage point, even as fresh government data shows the labor market is holding up better than expected.

Following the release of May’s jobs report earlier today, Trump posted on Truth Social, writing, “Go for a full point, Rocket Fuel!” The Bureau of Labor Statistics said 139,000 jobs were added last month, beating forecasts of 125,000.

The pressure on Jerome Powell, who chairs the Federal Reserve, comes as Trump insists the US economy is “doing great” but claims the Fed is holding it back. Trump wants rates brought down fast, arguing that the country is paying too much to borrow.

“Borrowing costs should be MUCH LOWER!!!” he wrote. He didn’t stop there. Trump also said Powell was “costing our Country a fortune” and added that the economy was only growing “despite him.” That wasn’t new. Trump has been criticizing Powell for months, even before he took the Oval back in February.

Trump attacks Powell as markets see no cuts coming

The Fed is not expected to cut interest rates at its next meeting later this month. Traders currently see almost no chance of even a small cut, let alone the 100 basis points Trump is asking for. In fact, the Federal Reserve hasn’t made a cut that large in one go since March 2020, during the first wave of COVID-19.

That decision was made to calm financial markets as the economy locked down. Since then, any rate changes have come in smaller steps.

During the last year of Joe Biden’s presidency, the Fed cut rates by a full point — but spread out over time, not in a single decision. Trump, though, is calling for the entire point to be slashed immediately, regardless of recent job growth or wage inflation.

His critics in the Fed say rate cuts now could heat inflation back up. Trump doesn’t care. He wants to cut now, and then raise later if needed. “If inflation flares up,” he wrote, “Powell could just raise rates again.”

He also pointed to moves from other central banks, saying the Fed is falling behind. Just a few days ago, the European Central Bank cut its benchmark rate by 0.25%, its eighth cut since June of last year. The ECB also said this would be its final cut for 2025, citing weak growth and slower inflation.

Trump used that as proof that Powell is being too cautious. He said that while Europe is reducing its borrowing costs, the Fed is stuck — and it’s hurting the US

Wages climb as rate cut hopes fade

Friday’s labor report also showed that average hourly earnings rose 3.9% year over year, which is higher than analysts expected. That’s part of why markets are betting against a summer rate cut. Before the report came out, traders estimated a 74% chance the Fed would cut rates in September. After the data hit, that number fell to 62%. The odds of more than two cuts before the end of 2025 dropped to just 22%.

Trump’s focus wasn’t just on short-term rates either. He said lower interest would help on “debt that is coming due,” referencing both long- and short-term borrowing by the US government. He argued that cutting now would ease the burden, and if inflation comes back, Powell could always tighten again later. The strategy is simple: lower costs now, worry about inflation if it comes.

Even as the economy keeps adding jobs and wages are climbing, Trump still insists the Fed is doing damage by staying put. “Too Late at the Fed is a disaster!” he wrote, recycling one of his favorite insults for Powell.

Trump has made it clear that he believes Powell’s slow reaction to economic conditions is costing the US billions. While the Federal Open Market Committee remains silent for now, Trump has already started using the issue to shape the conversation ahead of their upcoming meeting.

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