Warren Backs Powell Amid Trump Tension
Senator Elizabeth Warren, a prominent figure on the Senate Banking Committee from Massachusetts, expressed her support for Federal Reserve Chairman Jerome Powell on Wednesday.
This week, President Trump fluctuated in his stance regarding Powell’s future, hinting at the possibility of firing him before Powell’s term concludes next year—an action that would be highly unusual for the administration.
On Wednesday, Trump stated it was “very unlikely” he would remove the Fed chair, dismissing his previous criticisms, including comments on the Federal Reserve’s renovation costs, which align with constitutional standards.
Warren characterized Trump’s claims as a “pretty” thin excuse for his dissatisfaction with the Fed’s autonomy over interest rates. “No one has been fooled by this pretext to fire Powell,” she cautioned. “If he does, the markets will tank,” she added during her speech at the Excal Club in Washington.
For months, Trump has pressured Powell to lower interest rates, resorting to tactics that, according to many, haven’t successfully altered the policy direction.
“When his initial attempts at pressuring Powell didn’t work, Trump and Republicans suddenly shifted their focus to scrutinizing the Fed’s renovation costs. Give me a break,” Warren remarked.
Despite the pressures, the Fed has refrained from significant interest rate cuts this year, particularly in light of Trump’s tariffs, which economists expect to affect prices for consumers. Powell mentioned last month that stimulus cuts might resume if not for the rising foreign import duties.
Economic data shows that tariffs are starting to impact the market, as the consumer price index increased by 2.4% year-over-year in May, following a 2.3% rise in April.
Moreover, prices for imported items—like electronics and furniture—have surged, leading many economists to identify these increases as indicators of tariff-induced inflation.
According to Morningstar economist Preston Caldwell, “U.S. businesses currently bear much of the tariff burden, but this could evolve in the latter half of 2025 as companies seek to boost their profit margins.”
Warren, before stepping into public support for Powell, had been vocal about her concerns regarding the Fed’s recent adjustments in bank leverage rules, which allow banks to maintain less capital in relation to their borrowings.
In a letter to Vice-Chair Michelle Bowman, she argued that relaxed leverage requirements might prioritize profitability over security, enabling investments that could endanger depositor safety and lead to the collapse of large banks.
“We’re setting up Wall Street shareholders and executives to benefit, freeing up funds while reducing the capital available for lending and protecting depositors,” she concluded.
