On Friday, President Donald Trump took to social media to urge Jerome Powell, the Federal Reserve Chairman, to implement a significant one-percentage-point reduction in interest rates, despite a positive jobs report released by the Labor Department.
Trump, a consistent critic of Powell’s policies, made the case for the drastic cut even while asserting that the country’s economic performance is strong. He posted on Truth Social, saying, “Go for a full point, Rocket Fuel!”
Current market expectations indicate minimal likelihood for any rate reduction following the Federal Open Market Committee’s upcoming meeting later this month, let alone an extensive cut of a full percentage point.
This latest criticism of Powell marks yet another chapter in an unorthodox relationship that has developed during Trump’s administration, particularly as the Bureau of Labor Statistics reported a decrease in hiring that ultimately fell short of analyst expectations. Nonfarm payrolls added 139,000 jobs in May, surpassing estimates from Dow Jones of 125,000, yet slightly under the revised figure of 147,000 jobs added in April.
Analysts had anticipated weaker job growth as a potential consequence of Trump’s tariff policies and signs indicating a slowing economy.
The Federal Reserve had previously enacted rate cuts totaling one percentage point during President Joe Biden’s last year in office, following a series of rate increases in 2022 and 2023 aimed at combating inflation triggered by the Covid-19 pandemic and other factors.
In his Friday post, Trump lamented that other central banks worldwide have been reducing their rates, contrasting this with the Fed’s stance. Earlier this week, the European Central Bank lowered its benchmark rate by another quarter point—marking the eighth cut since June 2024—although it has signaled that no further reductions are expected this year.
The ECB’s decision followed concerns about declining inflation and economic growth, while U.S. Fed officials express worries that Trump’s tariffs might lead to a resurgence of inflation.
In a subsequent message, Trump argued that a rate cut would allow the U.S. to lower both short- and long-term rates “on debt that is coming due.”
The president further asserted that even if inflation were to increase, Powell could reverse course and raise rates as needed. “Very Simple!!! He is costing our Country a fortune,” Trump stated, criticizing the current borrowing costs and emphasizing that they should be “MUCH LOWER!!!”
He reiterated his previous criticisms of Powell, saying, “‘Too Late’ at the Fed is a disaster!” and claimed that the U.S. economy is thriving “despite him.”
Before the jobs report was released, traders were anticipating a potential rate reduction in September; however, those odds have diminished following the latest labor data, which also showed an unexpected increase in average hourly earnings, with wages rising at an annual rate of 3.9%, exceeding forecasts by 0.2 percentage points.
As a result, traders reduced the probability of a September rate cut to approximately 62%, now indicating only a 22% chance that the Fed will enact more than two cuts by the end of 2025, according to data from CME Group.
