Speaking at the NATO summit in Europe, President Donald Trump again criticized Jerome Powell, Chairman of the Federal Reserve — a man Trump himself nominated during his first term in office.
The role of the Fed Chair, like other key positions in the federal government, is designed to be independent of the executive branch. The President nominates a candidate, the Senate Banking and Finance Committees hold confirmation hearings, and if approved, the nomination proceeds to the full Senate for a final vote. Once confirmed, the Fed Chair serves a four-year term (not ten), although Board of Governors appointments are for 14 years. Importantly, the Chair cannot be removed by the President simply due to policy disagreements.
This structural independence is foundational to the credibility of the Federal Reserve and, by extension, the U.S. dollar's status as the world's reserve currency. Presidents come and go, and political winds shift, but the Fed is expected to conduct monetary policy with a steady hand, immune to short-term political pressures.
Yet the system has no built-in correction mechanism when the Fed Chair is perceived to be underperforming. Trump's frustration with Powell stems from the belief that he has been too slow to adjust interest rates, the Fed's principal tool for short-term monetary management.
There is historical context for this criticism. During President Biden's administration, the Federal Reserve was indeed slow to react to surging inflation. Interest rates remained near zero throughout the first 15 months of Biden's term. It wasn't until March 2022 — long after inflation was visibly rising — that the Fed began increasing rates. This delay came at a critical time, as the Biden administration was still pursuing massive fiscal initiatives, including the multi-trillion-dollar Build Back Better plan, which would have involved extensive government borrowing.
On May 5, 2022, the Federal Reserve announced the first of its many interest rate hikes—a dramatic 50-basis-point increase in its funds Rate to bring it into a target range of 0.75% to 1.00%. The Fed also began tightening its balance sheet, stopping its quantitative easing policy altogether, and asking borrowers to return cash to the Fed when their securities matured.
The Federal Open Market Committee (FOMC) met four times over the next six months, in June, July, September, and November. Each time, the Fed announced a 75-basis-point increase, unprecedented in modern times. On November 3, the Fed's target rate for the federal funds rate reached 4%. It meant that the Fed had substantially increased the cost of borrowing for the federal government to service its ever-increasing debt. In December and February, the Fed increased rates again. It was the fastest-tightening cycle in nearly five decades.
The Fed's initial passivity contributed to the inflationary crisis that gripped American households. Then, like a high school student scrambling to complete overdue assignments, the Federal Reserve pivoted sharply.
In hindsight, this correction may have been necessary — and effective — in curbing inflation. But the delayed response prolonged the pain for American families at the gas pump and grocery store. Trump's point is not that the Fed shouldn't raise or lower rates, but that it must act with foresight and speed.
Looking ahead, Trump is concerned that Powell is again being too slow, this time in reducing interest rates. After two years of elevated rates, the potential for economic drag is a genuine concern. And unlike monetary policy, which lies outside the president's direct control, Trump has an ambitious fiscal agenda that would be directly affected by the Fed's stance.
There are three areas where a rate cut could provide immediate benefit. First, lower rates would stimulate consumer and business borrowing, driving private-sector investment and economic expansion, especially important as Trump aims to revitalize both Main Street and Wall Street.
Second, Trump's focus on trade policy — including tariffs, reshoring manufacturing, and increasing exports — would benefit from a weaker dollar. Lower interest rates tend to reduce the dollar's value, making U.S. exports more competitive abroad and reducing the trade deficit.
Third, and perhaps most crucial, is the exploding cost of servicing the national debt. Today, interest payments on the federal debt exceed the entire U.S. defense budget. As Trump advances a renewed infrastructure and industrial policy agenda, a high-rate environment makes long-term borrowing prohibitively expensive. Lower rates would ease the Treasury's burden and expand fiscal flexibility.
Critics argue that Trump's public pressure on the Fed undermines its independence. The Fed should be immune to presidential influence. But history tells a more nuanced story. During the 2008 financial crisis, the Fed and the Treasury worked in lockstep. While the government executed fiscal bailouts through TARP, the Fed launched an unprecedented monetary intervention — cutting rates, buying mortgage-backed securities, and initiating multiple rounds of quantitative easing. Independence did not mean isolation.
Trump cannot unilaterally fire Powell. He has acknowledged this reality on numerous occasions. But Powell could resign, and Trump has made it clear that he would nominate a replacement immediately. In ordinary circumstances, this might be seen as presidential overreach. But these are not normal times. If the Fed delays action and the economy falters, the political consequences will be borne not by Powell but by the sitting president.
As with many issues in Trump's political world, he believes he is being forced to take bold steps to correct the errors of others. His target this time may be an independent institution, but the cost of inaction is one the nation can ill afford.
TIPP Picks
Selected articles from tippinsights.com and more
1. It Doesn’t Matter If Iran Can Build a Bomb. It Matters If America Has the Guts to Bomb It, Again.—Victor Davis Hanson, The Daily Signal
2. At Least 5 Reasons Why Trump Should Reject A Nobel Peace Prize—Editorial Board, Issues & Insights
3. Iran Vs The US And Israel — Kabuki Theater On Steroids—Larry C. Johnson, The Ron Paul Institute for Peace and Prosperity
4. Trump’s Iran Strike Puts China On Notice—Jarrett Stepman, The Daily Signal
5. As Dangers Rise Elsewhere, Americans Tire Of Russia-Ukraine Quagmire—Steve Cortes, RealClearPolitics
6. AOC, The Blue Jean Baby Queen—Editorial Board, TIPP Insights
7. House Oversight Panel Subpoenas Jill Biden’s ‘Work Husband’ Over Cover-Up—Fred Lucas, The Daily Signal
8. The Upside Of NYC Potentially Electing the Socialist Mamdani—Steve McKee, The Daily Signal
9. Trump Didn’t Need Congressional Approval For Iran Strike—Cully Stimson, The Daily Signal
10. White House Embraces “Daddy” Label After Rutte’s Viral Remark—TIPP Staff, TIPP Insights
11. Supreme Court Lets South Carolina Cut Planned Parenthood Medicaid Funds—TIPP Staff, TIPP Insights
12. Tuvalu Citizens Try To Escape Rising Sea Levels—TIPP Staff, TIPP Insights
13. Venice Hosts “Wedding Of The Century”—TIPP Staff, TIPP Insights
14. Rubio Unveils Visa Ban On Families Of Fentanyl Traffickers—TIPP Staff, TIPP Insights
15. Pritzker Announces Run For Third Term, Vows To Fight Trump—TIPP Staff, TIPP Insights
16. Democrats Stage ‘Guerrilla Theater’ Pride Show Inside Kennedy Center In Protest Of Trump—Elise McCue, The Daily Signal
17. Pete Hegseth Follows Suit, Insists Iran Didn’t Move Uranium Ahead Of U.S. Strike—TIPP Staff, TIPP Insights
18. ‘Cancel Bibi’s Trial, He’s A Hero,’ Says Trump—TIPP Staff, TIPP Insights
19. Trump Slams NYC Mayoral Nominee Mamdani As “100% Communist Lunatic”—TIPP Staff, TIPP Insights
20. Democrats Remember, Mourn ‘Un-American’ Ruling Overturning Roe v. Wade—Lucy Spence, The Daily Signal
21. Were Strikes On Iran’s Nuclear Sites Successful? National Security Expert Explains—Virginia Allen, The Daily Signal
22. Could Artificial Intelligence Regulation Fight Doom ‘Big, Beautiful Bill’?—George Caldwell, The Daily Signal
TIPP Market Brief – June 27, 2025
Your Morning Snapshot
📊 Market Snapshot
- S&P 500: ▼ 6141.02 (0.80% )
- 10-Year Yield: ▼ 4.253%, (4 basis points)
- Crude Oil (WTI): ▲ $65.22 (0.46%)
- Bitcoin (BTC): ▲ $107,088.74
- US Dollar Index (USD): ▼ 97.24 (0.12%)
- Gold: ▼ $3,322.81 (0.30%)
Bigger Charts: $SPX | $TNX | $WTIC | $BTCUSD | $USD | $GOLD
📈 Featured Stock
Our pick for today’s featured stock
📰 News & Headlines
MP Materials, FCX Jump On China Rare-Earth Curbs, Trump Tariff Bets—Jed Graham, Investor's Business Daily
Why Shares in Rare Earth Company MP Materials Surged Again This Week—Lee Samaha, The Motley Fool
⭐Recent Featured Stocks
Celestica, Inc. (CLS) (6/26)
TSS, Inc. (TSSI) (6/25)
Avis Budget Group (CAR) (6/24)
AngloGold Ashanti (AU) (6/23)
Jabil Circuit (JBL) (6/20)
AST Spacemobile Inc. (ASTS) (6/19)
Cloudflare Inc. (NET) (6/18)
Oklo Inc (OKLO) (6/17)
ATI Inc (ATI) (6/16)
Mr. Cooper Group Inc (COOP) (6/13)
More here
🧠 Macro Insight
🟢 Futures Climb on Optimism
Markets edge higher as investors look ahead to key inflation data and welcome easing geopolitical and trade tensions.
🟡 PCE Inflation Data in Focus
The Fed’s preferred inflation gauge is due today. Policymakers remain cautious, watching for signs of tariff-driven price pressure and labor market softening.
🔵 Nike Surges on U.S. Shift
Nike stock jumps after the company provides upbeat guidance and announces plans to relocate more production out of China to mitigate rising tariff costs.
🟠 Bank Stress Test Results Coming
The Fed will release the results of its big bank stress tests. Analysts expect clean passes, potentially unlocking more capital for lending, buybacks, and dividends.
🔴 Oil Inches Up, Still Down Weekly
Crude rises slightly but remains on track for steep weekly losses as the Israel-Iran ceasefire removes risk premiums from the market.
📅 Key Events Today
🟥 Friday, June 27
- 08:30 – Core PCE Price Index (YoY) (May): Forecast: 2.5%
- 08:30 – Core PCE Price Index (MoM) (May): Prior: 0.1% | Forecast: 0.1%
