Trump pressures Federal Reserve chair Jerome Powell for election-year rate cuts

Trump visited Federal Reserve headquarters on July 24, 2025, touring a $2.5 billion renovation project while publicly challenging Powell over costs and demanding: "I'd love him to lower interest rates." The visit marked the first presidential appearance at Fed headquarters since George W. Bush in 2006.

The Federal Open Market Committee held rates at 4.25-4.5% on July 30, 2025, but Fed Governors Christopher Waller and Michelle Bowman dissented in favor of a quarter-point cut. Two governors dissenting together last happened in December 1993, making this the rarest form of FOMC opposition in three decades.

Trump's own tariff policies created the inflation dilemma: the Fed projected inflation rising from 2.5% to 3.1% due to tariffs, while unemployment jumped from 4.3% to 4.5% and growth fell from 2.1% to 1.4%. Powell told Congress the Fed "would have cut by now were it not for tariffs," putting Trump's pressure in direct conflict with his own trade policies.

Federal Reserve governors serve 14-year staggered terms under 12 U.S.C. § 242 and can only be removed "for cause"—meaning misconduct, not policy disagreements. This statutory protection, written into the 1913 Federal Reserve Act, was designed to insulate monetary policy from presidential election cycles and short-term political pressure.

The Justice Department served the Federal Reserve with grand jury subpoenas in January 2026, threatening criminal indictment over Powell's June 2025 Senate testimony about renovation costs. Powell called this "an unprecedented action" that "should be seen in the broader context of the administration's threats and ongoing pressure" over interest rate decisions.

A September 2025 CNBC survey of 29 economists and money managers found 82% believe Trump's actions threaten Fed independence, with 68% predicting higher inflation, 57% expecting higher unemployment, and 54% anticipating lower growth as consequences. Gold surged to record highs as investors hedged against political interference in monetary policy.

Powell's term as Fed chair expires May 15, 2026, but his term as a Fed governor runs until January 31, 2028. Trump cannot remove him as chair before May 2026 without cause, and even after his chairmanship ends, Powell retains statutory protection as a governor unless Trump proves misconduct—a legal standard no president has successfully met to remove a Fed governor.

Senator Thom Tillis, a Republican on the Senate Banking Committee, announced he would "oppose the confirmation of any nominee for the Fed—including the upcoming Fed Chair vacancy—until this legal matter is fully resolved." JPMorgan CEO JDJamie Dimon stated "everyone we know believes in Fed independence" and warned that "anything that chips away at that is probably not a great idea."