President demands aggressive policy shift amid weak job data
President Donald Trump has publicly called for the Federal Reserve’s board of governors to override Chair Jerome Powell and impose immediate interest rate cuts, escalating months of criticism against the central bank’s leadership. In a Truth Social post on Friday, Trump labeled Powell as “stubborn” for resisting calls to slash rates amid mounting economic pressure.
Trump’s remarks followed a weak July jobs report, which showed only 73,000 new jobs added, with significant downward revisions to prior months. The president framed rate cuts as essential for fueling growth and easing debt burdens, accusing Powell of inaction despite what he claimed was minimal inflation.
Fed governors break ranks, dissent in favor of cuts
Two members of the Federal Reserve Board of Governors, Christopher Waller and Michelle Bowman, both nominated by Trump, issued statements supporting limited rate cuts. They argued that Trump’s tariff policy would have only a short-term inflationary impact and pointed to signs of a softening job market. Both dissented during Wednesday’s Federal Open Market Committee meeting, although they did not back the full 3-point rate cut Trump has demanded.
Trump applauded their dissent, using it to bolster his case that Powell is out of step with the broader board and public sentiment. The current benchmark interest rate sits at an average of 4.33%. Trump wants that slashed by 3 points, potentially pushing rates near the levels last seen during pandemic-era emergency policy.
Trump seeks legal avenues to replace Powell
While Trump has repeatedly clashed with Powell, a Supreme Court ruling in May effectively blocked any removal based on policy disagreements. Still, the White House is reportedly exploring other justifications for dismissing the Fed chair, including oversight failures and cost overruns on a $2.5 billion renovation project under the Fed’s management.
Powell’s current term as chair runs through May 2026. At that point, Trump would have the opportunity to nominate a replacement, subject to Senate confirmation. Until then, any effort to remove Powell would likely trigger legal challenges and further politicize monetary policy debates.
Economic backdrop adds urgency to rate debate
The pressure comes as concerns mount about the U.S. economy’s trajectory. Despite strong GDP figures, recent labor market data indicates a slowdown, with job creation sharply underperforming expectations. The unemployment rate has inched up, while long-term joblessness is also on the rise.
The Fed’s preferred inflation gauge is currently at 2.6%, slightly above the 2% target. Powell has maintained that rate cuts should wait until inflation clearly returns to target and labor markets weaken further. Trump, however, insists immediate cuts would spur growth and relieve financial strain on both households and the federal budget.