Trump called for the dismissal of the Fed Chair
The Fed is the Rich on Tarrants: Reply to the Trump-Puzzle Report on Oil Prices and Implications for Economic Growth
On Thursday, Powell warned that the tariffs from the Trump administration are likely to cause both higher prices and slower economic growth.
The president was evidently frustrated that the European Central Bank was preparing to lower interest rates for the seventh time, while the Federal Reserve is in a holding pattern. European leaders did not impose triple-digit tariffs that could reignite inflation.
Powell said that Trump’s import taxes were higher than most forecasters had expected, and that’s likely to result in a rise in inflation. The effects of inflation could be more persistent.
In his social media post, Trump called Powell’s report a complete mess, saying “Oil prices are down, grocery prices are down, and the US is getting Rich on Tarrants.”
The inflation report from the Department of Labor showed that grocery prices rose last month, despite the fall in oil prices. The effects of bird flu resulted in an increase in egg prices between February and March.
The president and the Fed chair have been at odds since the beginning, when Trump nominated for that post.
Powell has tried to avoid antagonizing the president, often ducking questions about Trump’s commentary. But he’s also been adamant that he intends to serve out the remainder of his term, which runs through May of next year.
Powell insists the president does not have the authority to fire him, except for “cause,” meaning some kind of bad behavior. The Supreme Court’s precedent supports that view. But the White House has signaled a willingness to test that standard, firing board members of other independent agencies.
Powell said on Wednesday that lawmakers from both parties have generally defended the Fed’s ability to set interest rate policy without interference. But that doesn’t mean there is no complaining.
At an event at the Economic Club of Chicago on Wednesday, Mr. Powell made it clear that he wanted the Fed to ensure that a one-time increase in the price level does not become an ongoing inflation problem. He said that the Fed could not take additional action on interest rates until it knew more about the outlook.
Mr. Trump soon reversed course and paused many of his tariffs for 90 days, citing a “queasy” bond market. The reprieve ended immediately when Mr. Trump imposed tariffs on Chinese imports that were at least fifteen times the rate that he had removed from consumer electronics. Financial markets are still uncertain, despite the whiplash that has done nothing to alleviate Mr. Powell’s concerns.
The President has privately fretted about a Great Depression-scale event occurring on his watch, and he shorthands it as ‘1929’. But the events of the past two weeks so alarmed some of Mr. Trump’s closest advisers, including his Treasury secretary, Scott Bessent, that Mr. Trump himself seems to have absorbed how close they came to a financial meltdown.
