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Donald Trump has called Federal Reserve chair Jay Powell a “numbskull” for not cutting interest rates, saying the White House may “have to force something” if the US central bank does not reduce borrowing costs.
The president on Thursday repeated his calls for the Fed to cut borrowing costs by a full percentage point — a measure Trump said would save the US hundreds of billions of dollars a year on its debt.
“We are going to spend $600bn a year because of one numbskull that sits there, [saying] ‘I don’t see enough reason to cut the rates’,” Trump told reporters, referring to Powell, who he has nicknamed “too late”. The president added: “I may have to force something.”
Trump did not specify what he meant by force — and said he would not fire the Fed chair ahead of the end of his term in May 2026.
The president’s comments came less than a week before the central bank’s June meeting, in which policymakers are expected to hold rates steady. The Fed has this year halted a rate-cutting cycle that began in 2024 over concerns that Trump’s trade tariffs could fuel a fresh bout of inflation.
At 4.25 per cent to 4.5 per cent, the Fed’s benchmark target range is more than double the main European Central Bank interest rate, following several moves by Eurozone rate-setters this year.
Powell has repeatedly said the Fed will set rates based on data, rather than Trump’s wishes for lower borrowing costs, including at a meeting late last month that was held at the president’s request.
Trump’s repeated attacks on Powell over his reluctance to cut rates this year have sparked speculation that he could speed up the nomination process for Powell’s successor.
Remarks last Friday from Trump that he could make a decision on a potential successor “very soon” have led to speculation among some economists that he could nominate a “shadow Fed chair” in a bid to massage expectations of future rate cuts once his preferred candidate takes charge of the central bank.
Treasury secretary Scott Bessent, who is seen as one of the leading candidates to replace Powell, proposed the idea of creating a shadow Fed chief in an interview in October.
Stanford academic and former Fed governor Kevin Warsh, National Economic Council head Kevin Hassett and current Fed governor Christopher Waller are also considered potential candidates for the job.
The “shadow” role could, in theory, move expectations of where interest rates will be years from now, which would — if credible — lead to immediate movements in US borrowing costs.
However, Fed-watchers are sceptical on whether a shadow Fed chair could influence expectations of future rate cuts in an environment of heightened economic uncertainty.
“Markets are not going to defer to an individual that is not yet confirmed as a member of the Fed board, much less the chair,” said Doug Rediker, managing partner at International Capital Strategies. “If you want to make sure you are upending investor confidence in an already tense Treasury market, then make sure you have competing voices on what the Fed is going to do.”
He added: “The earlier Trump names someone, the more opportunity he or she has to say or do something that puts a bullseye on their head and for people to find reasons to oppose them.”
