That didn’t take long. Wednesday afternoon the Federal Reserve decided to keep its benchmark interest rate steady–no rate cut. Wednesday night President Donald Trump renewed his call for the Federal Reserve to lower interest rates as he criticized the central bank’s decision.
“The Fed would be MUCH better off CUTTING RATES as U.S.Tariffs start to transition (ease!) their way into the economy,” Trump wrote on Truth Social. “Do the right thing.” Trump added: “April 2nd is Liberation Day in America!!!”
President Trump’s criticism of the Fed’s decision certainly isn’t a surprise. Trump has called for cuts before but has otherwise declined to intervene in Fed policy decisions. During the campaign, he vacillated on how independent the said the Fed should be from the White House.
Asked Thursday whether Trump would consider dismissing members of the Fed board, White House Press Secretary Karoline Leavitt sidestepped the question and praised his recent move to nominate Michelle Bowman to serve as the central bank’s vice chair for supervision
“We’re incredibly optimistic about her,” Leavitt told reporters at the White House. “The president has every right to criticize the decision. And he’s made it very clear that he believes in lower interest rates are going to help make this country boom.”
Trump has said he intends to allow Powell, whom he appointed to the post in 2018, to serve out the remainder of his term.
It’s not clear to me what angered the White House more–the decision not to cut rates or the drop in the Fed’s forecast for GDP growth in 2025. Earlier Wednesday, Trump’s national economic adviser, Kevin Hassett, stressed that the President and White House officials “very much respect the independence of the Fed.” But, he told reporters, he differed with the Fed’s growth forecast, saying he anticipated a 2.5% growth rate. Fed officials are now predicting a 1.7% expansion.
The administration–Treasury Secretary Scot Bessent, for example–has claimed that the administration’s efforts to cut regulations and to raise oil production would raise GDP growth to a 3% rate. Asserting a high GDP growth rate is essential if the numbers in the Trump Administration’s fiscal 2026 budget–with its trillions in tax cuts–are to have any chance at credibility.
The financial markets should worry about any loss of independence at the Fed reducing faith in the dollar and U.S. Treasuries. But my read is that, as has been the case with Trump tariffs, the markets will be slow to react because of a belief that PresidentTrump won’t really go there. My opinion is that the markets shouldn’t underestimate how serious President Trump is about any part of his agenda.
