Trump renews pressure on Fed as rate cut debate intensifies

President Donald Trump has escalated his criticism of Federal Reserve Chair Jerome Powell, accusing him of acting too slowly on interest rate cuts and intensifying a longstanding conflict that now threatens the central bank’s traditional independence.

“Too Late Powell has failed to act appropriately in the United States, even with inflation falling. Powell’s termination cannot come fast enough!” Trump posted on Truth Social, following the European Central Bank’s move to cut rates.

“It’s time for new leadership at the Federal Reserve,” stated Florida Senator Rick Scott, echoing Trump’s sentiment.

Historically, the Federal Reserve has operated independently from the White House, a convention designed to shield monetary policy from political influence.

Trump’s public attacks break with this tradition, raising questions about the future relationship between the executive branch and the central bank.

“Fed independence is a matter of law,” said Powell in a recent address, reaffirming the Fed’s autonomy and indicating he intends to serve out his term, which expires in May 2026.

The ongoing dispute comes as the Federal Reserve faces mounting pressure to respond to moderating inflation and market volatility.

Analysts note that since the pandemic, crypto and equity markets have become increasingly sensitive to Fed policy decisions, with a 2024 academic study finding that liquidity conditions now account for more than 65% of Bitcoin’s (CRYPTO:BTC) price movements.

Despite calls for immediate action, Powell and other Fed officials have maintained a cautious stance, opting for a wait-and-see approach as they monitor the economic impact of tariffs and other policy shifts.

Fed Fund futures currently imply less than a 10% chance of a rate cut at the upcoming May meeting, though expectations for a cut rise to over 65% for June.

Trump’s renewed criticism comes amid broader efforts by his administration to assert greater control over independent agencies, including the Fed, as outlined in the Project 2025 policy blueprint.

The plan includes controversial proposals to bring the central bank under tighter executive oversight and reduce its regulatory authority.