Trump Writes to Powell About Interest Rates
During a press conference on Monday, White House spokesperson Caroline Leavitt confirmed that President Donald Trump had sent a letter to Federal Reserve Chair Jerome Powell, expressing concerns about low interest rates in comparison to other countries.
On Tuesday, the Federal Reserve announced it had decided to lower interest rates, attributing this move to worries about rising prices linked to tariffs impacting consumers.
Powell engaged in a panel discussion on monetary policy at the European Central Bank Forum in Portugal, alongside other central bank leaders from entities like the EU, the UK, Japan, and South Korea.
When questioned about whether the Fed would have decreased rates without the inflationary pressures from tariffs, Powell replied, “I think so. In fact, we hit pause as tariffs grew and US inflation forecasts rose significantly due to those tariffs.”
Trump’s Concerns on Rates
He added, “So we didn’t overreact. In fact, we didn’t respond at all. It’s wise to wait and see how the economy behaves.” Powell highlighted that the US economy has recently approached the Fed’s 2% inflation target, pointing to a 4.2% unemployment rate as reflective of a healthy labor market.
Powell remarked, “For a moment, we set tariffs aside. Inflation was behaving as anticipated, and we were glad about that.”
Anticipation of Higher Inflation
Looking ahead, Powell expects to see higher inflation readings later this summer. He also indicated that policymakers should observe whether the effects are stronger or weaker than initially expected as they move through the supply chain.
“We haven’t seen much impact from the tariffs just yet, which was somewhat surprising,” he mentioned. “We’ve always acknowledged that the timing and permanence of inflation are uncertain.” He expressed hope for more insight soon, acknowledging that higher readings could appear earlier than expected.
Trump Critiques Powell
Meanwhile, Trump has openly criticized Powell, expressing disappointment that the central bank hasn’t lowered rates to stimulate more economic activity. He has even referred to Powell’s intelligence and decision-making as “poor” and “too late.”
After nominating Powell as Fed Chair in 2017, Trump’s discontent with Powell’s management of monetary policy has been well-documented.
Trump’s Memo to the Federal Reserve
In a memo sent on Monday, Trump claimed the Fed “sacrificed a lot of money to the US” by not lowering rates. He insisted, “We need to drop the rate significantly. Hundreds of billions have been lost and there is no inflation,” further illustrating his position.
Leavitt mentioned that Trump included a chart comparing US rates with lower benchmark rates from various countries.
At the last four meetings in 2025, the Fed maintained its benchmark federal funding rate target between 4.25% and 4.5%. The next meeting to discuss rates is set for late July.
