US President Donald Trump’s constant criticism of the Federal Reserve and its decision on interest rates may seem like a way to exert pressure, but it’s not as simple as he thinks. The Fed Chair, Jerome Powell, plays a crucial role in setting monetary policy, including interest rates.
Trump’s frustration with the Fed is rooted in his desire to boost economic growth and create jobs. He believes that lowering interest rates would stimulate investment and hiring. However, the Federal Reserve’s actions are influenced by multiple factors, including inflation, employment, and global market conditions.
The Fed Chair’s ability to lower interest rates alone is limited by the complexity of the economy and the need for careful consideration. Powell has consistently stated that he will not cut rates unless there is a credible threat to the economy. Trump’s pressure on the Fed may lead to short-term economic gains, but it also carries risks of inflation, asset bubbles, and instability in the financial markets.
As the president’s pick for the next Fed chair approaches, policymakers are bracing themselves for further scrutiny. The Federal Reserve must balance its own goals with the demands of a presidential administration that has limited understanding of monetary policy.
Source: https://www.bloomberg.com/news/newsletters/2025-07-09/trump-may-find-prodding-the-fed-on-interest-rates-not-so-simple