U.S. President Donald Trump warned the economy may slow if the U.S. Federal Reserve does not move to immediately reduce interest rates, in his latest broadside against Federal Reserve Chairman Jerome Powell.
Trump asserted in a social media post Monday that “there can be almost no inflation” because of falling energy and grocery prices.
“But there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW,” Trump said, referring to Powell.
While oil prices are down, Consumer Price Index data from March shows that average grocery prices are more than 2% higher than they were a year before, and up nearly half a percentage point from the previous month.
Trump has rattled Wall Street by repeatedly criticizing Powell and suggesting he had the ability to remove the Fed Chair before the end of his term. U.S. equities sunk on Monday as traders weighed the chances Powell gets axed, with the S&P 500 Index falling 1.5%.
The U.S. president unleashed a tirade against Powell last week right before the European Central Bank lowered its benchmark rate by a quarter point to 2.25%. The U.S. president repeatedly complained that the Fed was not cutting interest rates quickly enough.
The U.S. president’s comments come as central bankers and economic policymakers from across the world are set to meet in Washington this week for the International Monetary Fund and World Bank spring meetings.
“I’m not happy with him. I let him know it. And oh, if I want him out, he’ll be out of there real fast, believe me,” Trump told reporters during a meeting with Italian Prime Minister Giorgia Meloni.
Trump’s decision to impose sweeping tariffs on foreign imports has raised concerns that inflation could grow as consumers and businesses begin feeling the impact of the additional levies.
In a speech last week at the Economic Club of Chicago, Powell said that the Fed must ensure tariffs don’t trigger a more persistent rise in inflation, and indicated the central bank would “wait for greater clarity before considering any adjustments to our policy stance.”
Powell also noted the central bank’s independence “is a matter of law,” and that “we’re not removable except for cause.”
National Economic Council Director Kevin Hassett on Friday told reporters that the president was studying the question of whether he’s able to fire Powell.
Jennifer A. Dlouhy, Bloomberg News
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