Powell Rules Out Fed Rate Cuts to Stabilize Markets, Trump Slams Him as "Too Late and Wrong"

On April 16, Federal Reserve Chair Jerome Powell, speaking at the Economic Club of Chicago, reiterated that the Federal Reserve has no plans to intervene in volatile financial markets. "Don't Expect Fed to Intervene in the Market... Trump's Position Changes Daily," Powell stated.

This marked his first speech since President Trump paused some of the more stringent measures in his series of tariff proposals. Meanwhile, Trump intensified his criticism of Powell on Truth Social, leveraging the European Central Bank's anticipated seventh interest rate cut in April to press for immediate Fed action. Labeling Powell as "always TOO LATE AND WRONG," Trump demanded rate cuts and called for Powell's termination, heightening tensions as markets face ongoing uncertainty.

When asked whether the Fed would step in to address the stock market's sharp declines on his speech, Powell emphasized that current market fluctuations reflect broader uncertainty, not a crisis requiring Fed action. "Markets are digesting the present situation, and that means volatility," he said, noting that short-term turbulence is likely to persist as hedge funds deleverage and investors adjust positions. Powell noted that markets are grappling with uncertainty, understandable given the significant changes in President Trump's tariff regime. He cautioned against hasty conclusions about the root causes, drawing on past experiences like bond market upheavals where initial assumptions often proved wrong months later. "It’s too early to pinpoint what's driving this," Powell added, highlighting the Fed's commitment to data-driven decisions over reactive measures. The Fed's benchmark rate remains at 4.25%–4.5%, unchanged since December 2024, reflecting its focus on balancing inflation, currently at 2.9% according to the Consumer Price Index, against economic growth.

However, Trump's Truth Social post painted a starkly different picture, framing Powell's inaction as a failure to capitalize on economic gains. "The ECB is expected to cut interest rates for the 7th time, and yet, 'Too Late' Jerome Powell of the Fed, who is always TOO LATE AND WRONG, yesterday issued a report which was another, and typical, complete 'mess!' Oil prices are down, groceries (even eggs!) are down, and the USA is getting RICH ON TARIFFS. Too Late should have lowered Interest Rates, like the ECB, long ago, but he should certainly lower them now," Trump wrote.

Trump has repeatedly urged the Fed, led by Powell, to cut rates to stimulate U.S. economic growth. Despite Trump's pressure, Powell's comments suggest no rush to cut rates. As of April 17, the CME FedWatch Tool indicates a mere 9.9% probability of the U.S. Federal Reserve cutting interest rates by 25 basis points at its May meeting, while the likelihood of maintaining the current rate remains significantly higher at 90.1%.

Additionally, Trump stated in his post, "Powell's termination cannot come fast enough!" This remark reignited attention on whether Trump might seek to remove the Fed chair. According to a Bloomberg report, President Trump has requested that the U.S. Supreme Court allow him to immediately dismiss senior officials at two independent agencies. If Trump prevails, this could set a precedent for gaining authority to remove independent agency heads, including the Fed chair. According to Reuters, Powell, in a wide-ranging conversation, stated that the Fed is closely monitoring the Supreme Court case regarding Trump's power to fire independent agency officials but believes the outcome does not apply to the Fed. Powell stressed that the Fed's independence is a legal matter, changeable only by Congress, and won enthusiastic applause for committing to craft monetary policy without regard to politics or any other external factors.