White House Softens Stance on Federal Reserve Leadership Amid Rate-Cut Pressure

The Trump administration shifted its approach toward Jerome Powell this week, with the president telling reporters he harbors “no intention” of removing the Federal Reserve Chair—a marked departure from his earlier rhetoric. The reversal came after Trump had posted inflammatory comments on his social media platform, including a message that Powell’s removal “cannot come fast enough,” and publicly labeled the Fed leader a “major loser.”

Speaking to the press, Trump walked back the antagonism while maintaining his core complaint: “The press runs away with things. I would like to see him be a little more active in terms of his idea to lower interest rates.” His economic adviser, Kevin Hassett, had previously suggested the administration was examining legal avenues for removal, but Trump’s latest comments signal a recalibration of that position.

The Underlying Tension: Powell vs. Trump on Monetary Policy

The friction stems from disagreement over rate strategy. Powell has resisted Trump’s push for aggressive interest rate cuts, instead keeping rates steady and citing concerns that the administration’s trade policies could accelerate inflation while dampening economic growth. This stance infuriated Trump, who on Friday declared, “I’m not happy with him,” warning that Powell would be “out of there real fast” if needed.

The escalating criticism triggered nervous market movements, with stocks sliding on Monday as investors grew concerned about potential threats to Federal Reserve independence. Capitol Hill also took notice, with Republican Senator John Kennedy weighing in: “I don’t think the president, any president, has the right to remove the Federal Reserve chair,” underscoring the importance of central bank autonomy for long-term economic stability.

Powell and Fed Officials Hold Firm on Independence

Powell has made clear he intends to serve through his term, which extends to May 2026, and has dismissed speculation that ongoing legal proceedings could undermine the Fed’s position. Minneapolis Federal Reserve President Neel Kashkari reinforced this message, stating that insulation from political pressure is “the foundation for a strong economy.”

Meanwhile, Fed Governor Adriana Kugler signaled vigilance regarding inflation risks. She committed to maintaining current policy rates “for as long as these upside risks to inflation continue,” while noting that tariff increases pose a genuine threat to price stability. Kugler emphasized that heightened economic uncertainty demands careful monitoring of both inflation dynamics and labor market conditions, acknowledging that tightening financial conditions could restrain future growth.

Trump’s recent comments suggest a willingness to negotiate rather than confront, though his underlying frustration with Powell’s cautious approach remains evident. The outcome of this dynamic will likely shape not only monetary policy direction but also broader market confidence in the Fed’s institutional integrity.