The Fed chair will appear in Congress today and tomorrow, first before the House Financial Services Committee committee before facing the Senate Banking Committee again Wednesday morning.
Powell will have the opportunity to demonstrate why he and other members of the Federal Open Market Committee (FOMC) refused to reduce the base rate to 4.5% from the current 4.25 rating in 2025.
The FOMC chairman has been consistent in reasoning and keeping himself away from political rhetoric, but still faces criticism from economists who say his relatively tense monetary stance is unreasonable.
Trump urged politicians to work hard to push why Powell did not lower the base interest rate and approved the president’s wishes.
Writing the Truth Society Hours ago, Trump said: “I hope Congress can really do this very stupid, hard-headed person.
Trump’s reason for pushing for lower interest rates is based in part on other facts Central banks around the world have begun He added that his policy was relaxed, “Europe has 10 cuts and we have zero insurance. No inflation, great economy – we should be at least two to three points lower.
“There will be saving US$800 billion a year, and more. How different this will make. If things go negative later, raise interest rates.”
The push to lower interest rates is contrary to Trump’s inquiry on the campaign last year. While running for president, Trump claimed that Powell was playing a political role, bringing Biden Camp to economic favors if it cuts.
Almost after winning the Oval Office, Trump changed his wit and began asking Powell to cut it and claimed that the economy is stable enough to maintain a lower speed and increased economic activity.
It can be said that this shows why central banks are federally independent and therefore can use the main leverage of the economy to the long-term interests of enterprises and consumers. Whimsical with Oval Office.
Powell and FOMC clearly show why they don’t want to cut, which could put two aspects of their dual mission (maximum employment and 2% inflation) in the conflict.
The keywords for recent meetings are “clear” –Instead, members of the FOMC want to wait for more specificity Data before starting to plot the path to a more normalized interest rate.
Although the role of FOMC is not to comment on policy, it cites political factors such as Tariffs and geopolitical inflationary pressures.
While the market may prefer cutting, what really scares analysts and investors is when Trump’s pressure on base rates gets stuck in tampering issues.
For example, when Trump threatened to fire Powell earlier this year, the market responded negatively to investors Warnings are expected to fall “severely” in asset prices If the president does go too far in questioning the power and autonomy of the Fed.
trump card Quickly backtracksaid Powell was the first appointed by the president in his first term, and he will complete his term in 2026.
Time of change
Although Trump’s claim that the FOMC’s refusal to lower the base interest rate has cost the economy $800 billion, there is no explanation, some economists have more broadly argued that Powell should not be based on current decisions based on potential inflation factors.
For example, the Oval Office has changed its stance on tariffs multiple times, whether through a 90-day moratorium or a deal with certain countries, or a bigger threat to hikes in the EU, like the EU.
But experts point out that the sharpest end points of these threats have not been achieved, and both inflation and employment data have remained flat in the past few months.
For example, Jeremy Siegel, professor of emeritus finance at the University of Pennsylvania Wharton, wrote: “It is a good reason for bad economics to take the price increase caused by taxes as a reason to remain restrictive. A 10% sales tax is unnecessary for currency tightening, which is a limit on currency; on lower tax plans; almost no tax rate should be imposed, and almost no tax rate should be imposed – 75 should be used. 3.5% – in line with the true neutral speed of the economy.”
Writing for WisdomTreeSiegel, who is a senior economist, added that Fed Gov. Chris Waller advocated cutting the tax rates in July, adding: “Does he auditioned as a replacement for Powell? I agree with Waller’s agreement that we are at a much higher speed than neutral rates, the arrival of tariffs.”
