President Donald Trump escalated his war of words with Federal Reserve Chair Jerome Powell on Sunday, accusing him of keeping interest rates “artificially high” and insisting the benchmark should drop to "1% or 2%”, half of what it is now.
What Happened: Appearing on Fox News' "Sunday Morning Futures," Trump called Powell a "stupid person" and “a bad person,” claiming the Fed chief's policies force the government to refinance roughly $9 trillion in debt at punitive costs.
“We have a bad Fed chairman," he said. "But… the numbers are so good it doesn't even matter that he keeps the rates artificially high.”
The President's broadside followed months of threats to fire Powell, warnings that rattled bond markets earlier this year. After legal advisers cautioned that dismissing the chair could violate the Fed's independence, Trump shifted to pledging a successor who will slash borrowing costs. "I know within three or four people who I'm going to pick," he told reporters last week at a NATO summit, labeling Powell "terrible," according to Reuters.
See also: Senate Republicans Propose $313 Billion Cut In Medicaid Spending In Trump’s ‘Big, Beautiful Bill’
Why It Matters: Treasury Secretary Scott Bessent said on CNBC that the administration could nominate a replacement as soon as October, raising the prospect of a “shadow Fed” months before Powell's term ends in May 2026. Trump confirmed he would not appoint anyone "who doesn't want to cut rates," and singled out former Fed governor Kevin Warsh as "very talented," though he stopped short of endorsing him, states Reuters.
The Fed's target range stands at 4.25%–4.5% after aggressive 2024 hikes. Policymakers signaled modest easing later this year but argue larger cuts risk reigniting tariff-driven inflation.
Critics warn that overt political pressure could erode the central bank's credibility and unsettle global markets. A report from the Peterson Institute suggests that undermining the Fed’s independence could lead to a persistent 2 percentage point annual increase in inflation, according to an AP report.
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