President Donald Trump has called for the Federal Reserve’s board of governors to take control of monetary policy, criticizing Fed Chair Jerome Powell for not cutting short-term interest rates. The move comes after a jobs report showed a rapidly decelerating economy, with just 73,000 new jobs added in July.
Trump argues that rate cuts would lead to stronger growth and lower debt servicing costs, but economists warn that large rate cuts could cause inflation to accelerate. The Fed’s preferred measure of inflation is currently at an annual rate of 2.6%, slightly higher than its 2% target.
The White House has been exploring options for removing Powell as chair due to disagreements over policy, with some officials suggesting the Fed chief could be fired for cause over cost overruns on renovation projects. However, a recent Supreme Court ruling indicates that Trump may not have the authority to remove Powell without Senate confirmation.
With Powell’s term set to end in May 2026, Trump is expected to nominate a new candidate to replace him. The move marks the latest development in a months-long battle between Trump and the Fed over monetary policy.
Source: https://apnews.com/article/trump-powell-interest-rates-federal-reserve-fed-88fe11c20c3074bbd1445a69bbdc623e