Fed Criticized by Trump Over Interest Rate Decision
Washington, DC - President Donald Trump has wasted no time in criticizing the Federal Reserve's (Fed) decision to keep interest rates steady. In a social media post on Wednesday afternoon, Trump argued that Fed Chair Jerome Powell and the central bank "failed to stop the problem they created" on inflation.
Trump also accused the Fed of "doing a terrible job" regulating banks and claimed that it had focused too much on issues such as diversity, equity, and inclusion (DEI), gender ideology, "green" energy, and climate change. He vowed to address inflation by increasing American energy production, reducing regulations, rebalancing international trade, and reinvigorating American manufacturing.
"I will do much more than stopping Inflation, I will make our Country financially, and otherwise, powerful again!" Trump stated.
Trump's comments escalate tensions between the administration and the Fed over the direction of monetary policy. Last week, Trump said he would "demand" lower rates and expressed confidence that the Fed would comply. Powell, however, has not yet spoken with Trump and declined to comment on his statements.
Powell emphasized that the Fed remains independent and will continue to focus on fulfilling its mandate without political interference. "The public should be confident that we will continue to do our work as we always have, focusing on using our tools to achieve our goals," he said.
Trump's criticism also included accusations that the Fed has been distracted by DEI and climate change. The Fed recently withdrew from a global group of central banks focused on the financial risks of climate change, a move that Powell defended as being unrelated to politics.
Despite Trump's criticism, there are signs of improvement in the inflation picture. The latest Consumer Price Index (CPI) reading showed modest progress in December, and economists expect the Fed's preferred inflation gauge, the Personal Consumption Expenditures (PCE) index, to remain stable at 2.8% in December.
While Powell declined to directly address Trump's comments, he acknowledged that the economic policies of the new administration could impact Fed policy decisions. The central bank will carefully monitor developments in trade, immigration, fiscal policy, and regulatory policy before making any adjustments to its monetary stance, he said.