Trump frustrated with Fed chair as rates stay unchanged

President Donald Trump is openly upset with Federal Reserve Chair Jerome Powell for keeping interest rates steady. On June 18, 2025, the Fed decided to hold rates at 4.25%-4.5%, ignoring Trump’s calls for a cut. Trump, who has called Powell “stupid” and criticized his leadership, even jokingly suggested he could take over the Fed himself.

The president believes lower rates would boost the economy, but Powell insists on waiting for clearer signs about how Trump’s policies, like tariffs, will impact prices. Powell explained that uncertainty is high, especially with Trump’s planned tariffs likely to raise costs for consumers this summer. The Fed expects inflation to climb from 2.1% to 3% by year-end, though the exact effect depends on how long tariffs last.

Despite recent low inflation data, Powell said the labor market doesn’t urgently need rate cuts, and the Fed will act based on data, not pressure. The Fed’s “dot plot” shows most officials predict two rate cuts in 2025, but seven of nineteen see no cuts this year.

This cautious approach frustrates Trump, who met Powell in May to push for lower rates. Powell, whose term ends in May 2026, faces ongoing criticism as Trump considers replacements like Treasury Secretary Scott Bessent. Markets reacted, with the S&P 500 dipping after Powell’s comments on inflation and tariffs.