Trump escalates pressure on Powell: Idiot! If interest rates are not lowered soon, "some coercive measures" will have to be taken.

Trump criticized Powell as an idiot, saying that dropping the interest rate by 2 percentage points could save the U.S. $600 billion a year, but we can't get this guy to do it.

Written by: He Hao

Source: Wall Street Watch

On Thursday, U.S. President Trump intensified pressure on the Federal Reserve regarding the drop in interest rates. He sharply criticized Federal Reserve Chairman Powell, calling him a "dummy."

Trump stated that if the interest rate is dropped by one percentage point, the interest paid will be reduced by that much; if the interest rate is dropped by two percentage points, the interest will be paid even less. We have a large amount of short-term debt, and I hope the cost of debt remains low in the long term. He said that dropping the interest rate by 2 percentage points could save the U.S. $600 billion each year, but we can't get this person to do it:

We will spend 600 billion dollars every year just because an idiot sits there and says, I see no reason to drop the Interest Rate now.

Trump added that he does not oppose the Federal Reserve raising interest rates if inflation rises, but inflation is currently dropping and some measures may have to be taken.

We call him Mr. Too Late, right?

If inflation returns, the Federal Reserve can definitely raise interest rates again. Assuming there is inflation, you can raise interest rates a year later. I don't mind, go ahead and raise them, I fully support it. By then I will call you. However, it will be too late by then.

But inflation is now dropping, and I may have to take some coercive measures.

Trump recently stated that he would not dismiss Federal Reserve Chairman Powell. He made this remark during an event at the White House on Thursday:

The fake news is saying, oh, it would be terrible if you fired him, it would be terrible. I don’t know why it would be terrible, but I won’t fire him.

A few days ago, Trump stated that he would "soon" select the next chairman of the Federal Reserve. The current chairman of the Federal Reserve, Powell, will complete his term in May 2026.

In the past week, the Trump administration has frequently called on the Federal Reserve, urging the Federal Reserve to drop interest rates:

Last Friday, after the release of the US non-farm payroll data, Trump said that the "Mr. Too Late" of the Federal Reserve is a disaster! Europe has dropped interest rates 10 times, and we haven't done it once. Just drop a whole percentage point, rocket fuel! If inflation comes back, just raise interest rates to respond.

This Wednesday, after the release of the US CPI report, Trump stated that the latest data on the US Consumer Price Index (CPI) performed ideally, calling for the Federal Reserve to drop the Interest Rate by one percentage point. This way, the US will save a significant amount on the interest of its upcoming debt, which is very important.

On Wednesday, U.S. Vice President Vance stated that the Federal Reserve's refusal to drop interest rates is a failure of monetary policy.

Trump's speech on Thursday came after the release of U.S. economic data — the overall increase in the U.S. PPI for May remained moderate, with a month-on-month increase of 0.1%, and the core PPI hitting its lowest level since August 2024. Tariffs have not yet caused higher price pressures on consumers and businesses. However, U.S. corporate profit margins continue to be under pressure, indicating that companies are absorbing the cost of tariffs themselves.

It should be noted that it is extremely rare for the Federal Reserve to drop the benchmark Intrerest Rate by one percentage point in a single meeting unless in the context of a severe economic recession or financial crisis. Not to mention the two percentage points mentioned by Trump recently. The last time the Federal Reserve dropped the Intrerest Rate by one percentage point was in March 2020, when the U.S. economy sharply declined due to widespread lockdowns and layoffs caused by the COVID-19 pandemic, triggering a deep recession.

Federal Reserve officials plan to hold a meeting in Washington from June 17 to 18, and are expected to keep the benchmark Intrerest Rate unchanged, as they have done so far this year. Many policymakers have indicated that they will not adjust the rate until they have clarity on how Trump's trade, immigration, and tax policies will affect the U.S. economy. Currently, traders are fully digesting the scenario of two drops in the Fed's rates this year.

In the last fiscal year, the interest on the debt paid by the U.S. government accounted for 3.06% of GDP, the highest level since 1996. Despite Trump and Republican members of the U.S. Congress pledging to control government spending and reduce the deficit, the tax bill they pushed may have the opposite effect according to multiple estimates. The Congressional Budget Office (CBO) expects that the bill will result in an additional $551 billion in interest expenses over the next decade.