President Trump, in a private meeting at the White House on Thursday, told Federal Reserve Chair Jerome Powell that he was making a “mistake” by not lowering interest rates, delivering in person a view he has expressed publicly and repeatedly for months now.
The meeting, held at the president’s invitation, covered economic developments including for growth, employment, and inflation, Powell’s office had earlier said in a statement.
“The President and I both saw the statement that the Fed put out after the meeting. That statement is correct. However, the President did say that he believes the Fed chair is making a mistake by not lowering interest rates, which is putting us at an economic disadvantage to China and other countries,” White House spokesperson Karoline Leavitt said.
Trump has repeatedly lashed out at Powell, whom he nominated to the post during his first term and who was renominated to a second term by Democratic President Joe Biden, and said he wants to see him gone from the central bank.
Powell has generally declined to comment on those criticisms except to say that it’s the central bank’s duty to focus on safeguarding the economy without regard to politics.
“Chair Powell did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming economic information and what that means for the outlook,” the Fed’s statement on Thursday said. “Chair Powell said that he and his colleagues on the FOMC will set monetary policy, as required by law, to support maximum employment and stable prices and will make those decisions based solely on careful, objective, and non-political analysis.”
Trump, who has attacked Powell over the Fed’s decision to not lower interest rates, recently said he has no intention of trying to fire Powell. But the possibility of a firing has unsettled financial markets that bank on an independent Fed’s ability to do its job without political interference.
Those fears were partly alleviated last week after a Supreme Court ruling, in a pair of cases testing Trump’s ability to fire the leadership of other independent government agencies, signaled the central bank may be treated as a special case whose chair cannot be terminated at will.
The Fed earlier this month left the policy rate in the 4.25%-4.50% range, where it has been since December, and policymakers have since signaled they may leave it there for another few months as they wait for more clarity on tariff policy.
Minutes from the Fed’s May meeting released on Wednesday show policymakers are worried the tariffs and policy uncertainty could slow the economy, but even more so are concerned that they could lead to persistently higher inflation.
Financial markets currently are pricing in a Fed interest-rate cut in September, with a second one to follow in December.
Powell last met with Trump in November 2019, during Trump’s first term, in a 30-minute meeting also attended by then-Treasury Secretary Steven Mnuchin. The chair has said that his meetings with the president are always at the request of the president and never the other way.
