Donald Trump tells Jay Powell
Free Unlock White House Watch News
Your guide on what Trump’s second term means to Washington, business and the world
Donald Trump told the Fed that he did not relax U.S. monetary policy during the first meeting of Trump's second term, which was a “mistake”.
According to the U.S. Central Bank, Fed Chairman Jay Powell invited the president to the White House on Thursday to discuss “economic developments including growth, employment and inflation.”
Negotiations follow the president's pressure on the Fed's chair to lower interest rates to mask the impact of government trade policies.
After the public meeting, White House press secretary Karoline Leavitt said Trump told Powell that he believed the Fed chairman “made a mistake by not lowering interest rates, which puts us at an economic disadvantage to China and other countries.”
According to the Fed, Powell “has not discussed his expectations for monetary policy, but emphasized that the policy path will depend entirely on the incoming economic information and what it means for the prospects”.
In a statement following Thursday's meeting, Powell told Trump that the chairman and colleagues' interest rate setting committee set by the Federal Reserve “will develop monetary policies based on legal requirements to support the highest employment and stable prices and will make these decisions based solely on prudent, objective, objective and non-political analysis.”
Trump has considered taking Powell from his post before the end of May 2026, which could upset the market and question the Fed's independence.
But the president said last month that he had “unintentioned to fire (Powell)” sootheed investors in his comments. Since Trump took office for the second time in January, the Fed's target range has maintained major interest rates between 4.25% and 4.5%.
Powell used the opening address in Princeton Sunday to call on students to protect democracy and described American universities as “important national assets.”
U.S. Central Bank officials warn that Trump's policy has the potential to have both slower growth and higher inflation, but suggests they have time to analyze the impact of measures on the economy before taking any new measures on monetary policy.
If the general impact of Trump's policy is to speed up inflation, it will advocate longer time to increase interest rates, and if employment suffers an adverse shock, it will advocate lower interest rates. However, while inflation is stable, the labor market remains relatively strong.
Other reports by Lauren Fedor