The Federal Reserve is supposed to have independence. The president does not put public pressure on the Fed chairman for certain outcomes or really talk about the Fed’s decisions at all, nor does the president publicly call the Fed chairman derisive names, like “loser.” And the president does not have the power to remove the Fed chairman, at least until the end of that person’s four-year term.
Those are norms that, for the most part, have held over the decades, but U.S. President Donald Trump is known for nothing if not transgressing norms.
After a week of sparring with Fed Chairman Jerome Powell, who Trump himself appointed to the position in 2018, the president on Monday made a Truth Social post in which he called Powell a “loser,” demanded a cut in interest rates, and accused Powell of lowering interest rates in 2024 to help Joe Biden and later Kamala Harris.
Donald Trump and “Preemptive Cuts” on Interest Rates
In the Truth Social post, launched at 9:41 a.m. on Monday, Trump stated that “preemptive cuts” in interest rates are being “called for by many,” although the president was not clear on who the “many” are.
Arguing that there is now “virtually no inflation” — more than a bit of an exaggeration — Trump argued that now is the time for a rate cut.
“There can almost be no inflation, but there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates,” Trump added, using a nickname he has applied to Powell in recent days, although later in the message he spelled it “To Late.”
In 2020 Trump, just two years after appointing Powell, questioned whether he was as big an “enemy” as Chinese President Xi Jinping.
Pro-Biden Rate Cuts?
Then, Trump shared a conspiracy theory that Powell’s interest rate cuts were timed to help the Democrats in the 2024 election, arguing that the only time Powell hasn’t been “to late” [sic] with rate cuts was during the run-up to the 2024 election.
Powell is a Republican who served in the George H.W. Bush Administration and was appointed Fed Chairman by Trump himself. He has not shown any pattern of using Fed decisions to help Democrats win elections.
Trump did not, in the message, threaten to remove Powell, although last week, in another post, the president said that Powell’s termination “cannot come fast enough.”
Per CNBC, “the president and his team are studying whether they can legally fire the central bank leader before his term expires in May 2026.” Powell has stated that he cannot be removed by the president and that he will not resign his post if asked.
Back in November, a Trump ally shared the scenario, with Axios, of appointing a “shadow” Fed chairman, who would undermine Powell.
If Trump were to try to remove Powell, it would almost certainly lead to a protracted court battle that could end up in the Supreme Court.
What If Powell Is Fired By Trump?
There has been considerable speculation that Federal Reserve independence is so crucial that it would cause markets to plummet if the president fired the Fed chairman and replaced him with a yes-man willing to do the president’s bidding directly.
Austen Goolsbee, an Obama White House economic adviser who is now president of the Federal Reserve Bank of Chicago, talked up the critical importance of Fed independence in a CNBC interview on Monday.
“When there is interference over the long run, it’s going to mean higher inflation, it’s going to mean worse growth and higher unemployment, because there’s just going to be a little less willingness to step up and do the hard things when the moment is tough,” Goolsbee said in the interview.
Sen. Elizabeth Warren (D-MA), also on CNBC, last Thursday predicted that a market crash would result from any attempt by Trump to fire the Fed chairman. And she said that as someone who has frequently been critical of Powell.
About the Author:
Stephen Silver is an award-winning journalist, essayist and film critic, and contributor to the Philadelphia Inquirer, the Jewish Telegraphic Agency, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. For over a decade, Stephen has authored thousands of articles that focus on politics, technology, and the economy. Follow him on X (formerly Twitter) at @StephenSilver, and subscribe to his Substack newsletter
