WASHINGTON (TNND) — President Donald Trump renewed his criticisms of Fed chair Jerome Powell on Wednesday, claiming he has “mental problems” and renewing his wishes to oust him from his position for now lowering interest rates enough to support the economy and reduce interest costs on the national debt.
During an investment forum with Saudi Arabia, Trump said Treasury Secretary Scott Bessent has been the “voice of reason” as he has considered trying to oust Powell.
“Scott, you’ve gotta work on this guy,” Trump told Bessent at the event. “He’s got some real mental problems. There’s something wrong with him. It’s just ridiculous. I’ll be honest, I’d love to fire his a**. He should be fired.”
Trump has repeatedly mused about firing Powell but has not followed through on it over his frustrations with the central bank’s slow pace of cutting its benchmark interest rate. He wrote in a note to Powell shared by the White House earlier this year that he thought the U.S. interest rate shouldn’t be higher than 1.75%, a figure well below the current range of 3.75% to 4%.
The Fed has cut its rate by a quarter-percentage point at each of its last two meetings and has one more meeting next month. It’s unclear whether officials will move forward with another cut as officials are increasingly divided over whether it is necessary despite some cracks emerging in the labor market amid concerns about inflation running above their target of 2%.
Political pressure on the Fed has mounted since Trump returned to office and stepped up his demands for officials to lower interest rates.
In addition to talking about firing Powell, Trump is also attempting to remove Fed governor Lisa Cook from her position over allegations of mortgage fraud and nominated a White House economic adviser who had advocated for aggressive rate cuts to serve on the Federal Open Markets Committee after a position surprisingly opened earlier this year.
Politicians have a long history of disagreeing with the Fed, which is designed to be an independent agency without political influence, but the string of moves from the White House and Trump’s suggestions of firing Powell have raised concerns about watering down its independence. Economists are concerned eroding the Fed’s independence could undercut confidence in financial markets and further add to the turbulence they have gone through this year.
Powell has refused to engage on the political pressures facing him and the Fed during his appearances and in public comments, including a visit by Trump to the central bank’s offices that have also come under scrutiny for the $2.5 billion price point.
“The Fed does a very good job of rising above all of that. Powell has done a very good job of just not really responding to that and staying within the lane that he’s supposed to stay in. He always starts off talking about that dual mandate, which is really what the Fed is supposed to be paying attention to,” said Russell Rhoads, a clinical associate professor of financial management at Indiana University’s Kelley School of Business.
Powell was first nominated to be the Fed chair by Trump in 2017 and was renominated to the post by former President Joe Biden as the central bank was navigating the post-COVID inflation while trying to keep the economy on track. His term will run out in mid-May, which will allow Trump to name a new Fed chair that is more likely to be supportive of his push to lower rates. The president is expected to name Powell’s replacement before the end of the year, though the Fed chair cannot overrule what its 12-person committee that makes decisions votes for.
Frustrations over rates could continue to climb if the Fed opts against cutting rates at its meeting next month.
Officials have been operating without official data for more than a month due to the government shutdown, which shut down the collection of figures used to compile reports on job creation, spending and inflation. Economic reports started to flow again with the government reopened, including the September jobs report that was released on Thursday. It showed employers added significantly more jobs than expected by economists with 119,000, but unemployment also rose to a four-year high of 4.4%.
The conflicting signals could lead the Fed to stand pat as inflation hawks can point to job growth, while policymakers who favor a cut will be concerned about the uptick in unemployment. Wall Street increased its bets on another quarter-point cut next month, but the odds were still below 50%.
Uncertainty over the direction of the labor market is only part of the issue facing the Fed. Officials are also trying to parse where inflation is moving due to Trump’s sweeping series of tariffs, some of which could be struck down by the Supreme Court, and what they will do to the economy. A lack of clarity on how the economy is performing and where trade policy will ultimately end up has been the primary driver of the slow pace of rate cuts this year.
“If they felt like the president and Congress were doing their job on the fiscal side, they may be willing to work a bit more with them,” Rhoads said.
