Fed Chair Jerome Powell Faces Criticism from Trump Over Interest Rates

In a contentious testimony before the Republican-controlled House Financial Services Committee on June 24, 2025, Federal Reserve Chairman Jerome Powell defended the central bank's current interest rate policies amid persistent criticism from former President Donald Trump. The ongoing debate centers around the Federal Reserve's approach to managing inflation and the economic climate, which Trump argues necessitates immediate rate cuts.

Powell's testimony highlighted the challenges the Federal Reserve faces in balancing inflation control and unemployment levels. "Policy changes continue to evolve, and their effects on the economy remain uncertain," Powell stated, underscoring the complexities introduced by recent trade tariffs and immigration policies championed by the Trump administration. He noted that while current inflation data show subdued numbers, professional forecasters expect an uptick later in the year.

The tension between Powell and Trump has intensified as the latter has repeatedly criticized the Fed's decision-making process. Trump, who claims that there is no inflation and a thriving economy, urged Powell to cut interest rates, suggesting that adjustments could be made later should inflation rise. This perspective contradicts Powell's assertion that maintaining price stability is crucial for sustained economic growth. According to Powell, "Without price stability, we cannot achieve the long periods of strong labor market conditions that benefit all Americans."

In addition to Trump's criticisms, other figures have joined the chorus against Powell. William J. Pulte, the director of the Federal Housing Finance Agency, accused Powell of politicizing the Federal Reserve, arguing that his decisions have negatively impacted individuals struggling with personal debt. In a post on X, Pulte stated, "Powell’s policies hurt real people who work good & hard, and are just trying to pay their car loans, credit cards, & mortgages."

The Federal Reserve's dual mandate from Congress is to keep inflation and unemployment low, but these goals can conflict, particularly in the context of rising inflation rates. Powell emphasized that the Fed is obligated to prevent temporary price increases from becoming a persistent problem. Current inflation remains above the Fed's target of 2%, with estimates suggesting a rise from 2.5% to 2.6% in May.

Economists express concern that the U.S. economy may be headed towards a situation characterized by both inflation and rising unemployment, commonly referred to as stagflation. Torsten Slok, chief economist at Apollo Global Management, highlighted that factors such as higher oil prices and tariffs are contributing to this troubling economic outlook, stating, "Lower GDP growth and higher inflation is the definition of stagflation."

As the Fed navigates these complex economic waters, Powell's future decisions will likely remain under scrutiny from both political leaders and the public alike. The ongoing debate over interest rates reflects broader tensions around economic policy and the trajectory of the U.S. economy in an uncertain global landscape.