He doesn't let go Trump on Powell. In view of the FOMC Fed meeting next week, the US president moves surrounding the Fed chairman on a different level, but equally, at least in the media, very impactful.
Trump's stated goal is to wanting lower rates to help the investments of American citizens and the American fabric. Less out in the open is the other reason behind his obstinacy: a rate cut would automatically translate into an easing of the federal debt which, precisely because of Trump's measures, is ballooning like a hot air balloon, through at least a discount on the cost of its management. For this reason, Trump continues to put pressure on Powell from various quarters, in effect threatening the independence of the Fed.
Trump's helmet-wearing skit at the Fed headquarters
Yesterday Trump took the opportunity of renovation of the central bank headquarters to visit the construction site, with lots ofthe white helmet on his head, showing off the his experience in the construction field and in cost control. It was the first time in almost 20 years that a US president entered the headquarters of the Federal Reserve.
Apparently Trump, prompted by questions from journalists, has downplayed his clash with the Fed Chairman: there is "no tension" he said. But on closer inspection, his thaw towards Powell was about just the topic of renovation costs of the building, estimated at a federal outlay of approximately 2,5 billion. Until a few days ago, Trump had been waving this same argument as the basis that could lead to the Powell's dismissal. Yesterday, Trump even tried to exaggerate, saying that he understood that the costs had reached $3,1 billion, with Powell responding that that figure also included a building completed five years ago.
But Trump, who couldn't possibly discuss interest rates with Powell, couldn't resist taunting him on the subject. "Well, I'd like him to lower interest rates," he said. When asked by a reporter what he would do if a manager on one of his construction projects went over budget, Trump responded bluntly. "Generally speaking, what would I do?" Trump said. "I'd fire them." Powell then cracked a smile when Trump punched him in the arm, saying he didn't want to "get personal."
Fed meeting expects stable rates next week
Analysts expect Federal Reserve officials to keep interest rates unchanged for the fifth time in a row on the occasion of meeting next week. Most monetary policy makers plan to lower rates at least twice before the end of the year, according to projections published in June. However, Powell and several other officials they said they preferred a cautious approach, as they fear the possibility that the pricing policies Trump's lead to apersistent inflation. Moreover, an overall stable labor market offers the opportunity to wait a little longer before cutting rates. Even Christine Lagarde yesterday, when it kept the rates in place after the numerous cuts praised by Trump himself as the right strategy to follow, he referred to the possible impacts of tariffs on the cost of living. The rate The U.S. federal funds rate currently stands at 5,25-5,50%, while the eurozone benchmark rate is currently at 2%. The U.S. inflation rate last month stood at 2,7%, while the European rate is below 2%.
Powell holds firm despite flood-the-zone encirclement
Despite pressure from Trump, which even led him to consult with lawmakers to see if it was possible fire Powell, the Fed Chairman has given no indication of wanting to step back, effectively becoming the champion of the independence and autonomy of the central bank.
There is a journalistic term used to indicate the strategy of encirclement that Trump is adopting towards Powell: “flood the zone", remember Bloomberg. When Trump attacks, he rarely does so in a linear fashion: he tries to hit from multiple angles his target, undermining the ability to focus on responding to a single criticism. This is exactly the situation Powell finds himself in, as Trump wants to corner the Fed and push her to join his program.
So, instead of just focusing on the disagreement over the timing of the interest rate cuts, Trump also attacked personally Powell, spending questioned renovation of the Fed's headquarters in Washington, discussed the assignment with at least one possible substitute and named three officials politicians in a planning commission that is examining the Fed's plan. Part of the flood-the-zone strategy It involves testing various actions, determining which are legal or likely to capture the attention of the Maga base, and then implementing them. The result is usually that the target, be it a person or an institution, is weakened.
Several senior Trump officials, including Office of Management and Budget Director Russell Vought, have urged Trump to fire Powell before the end of his presidency, which is scheduled for May 2026, leaving Powell with very few allies inside the White House or the Treasury Department. Never before had Trump lashed out with so much aggression against so many aspects of the Fed.
- White House lawyers They urged caution in firing him directly: according to the law that regulates the Fed, Trump would have to find a just cause. So, Trump was told to not yet have a solid legal basis to vindicate the just cause.
Meanwhile, Treasury Secretary Scott Besent met i candidates to replace Powell. Trump met privately Kevin Hassett, director of the National Economic Council, several times, which makes him emerge as the leading candidate to replace Powell.
