Trump says Powell must lower interest rates ‘now’ following GDP uptick
President Trump used a return to GDP growth ahead of a widely expected Federal Reserve decision to keep monetary policy unchanged to say that Fed chairman Jerome Powell must “now” lower rates.
The president called Wednesday’s 3% GDP number “WAY BETTER THAN EXPECTED!” on Truth Social adding “‘Too Late,'” MUST NOW LOWER THE RATE,” using the nickname he has repeatedly applied to Powell.
“No Inflation! Let people buy, and refinance, their homes!,” the president added.
The post came in response to a rebound in US economic growth and after a meeting last week between the two men where Trump said he now expects Powell to “do the right thing” and lower rates and perhaps even begin pushing in that direction this week.
Powell, meanwhile, has given no indication he is looking to change his approach for this week at least.
The latest flashpoint was Wednesday’s second quarter economic growth data that — after contracting to start 2025 — showed an annualized growth rate of 3% in recent months.
That beat expectations, with economists surveyed by Bloomberg previously having expected a 2.6% increase.
But it’s the inflation piece — in spite of Trump’s claims of no price increases — that is expected to keep interest rates steady later Wednesday, after inflation ticked higher in June, according to data released earlier this month from the Bureau of Labor Statistics.
Investors are suggesting there is very little chance of a rate cut today and are looking instead to see whether Fed governors Christopher Waller and Michelle Bowman dissent and push for lower rates in the months ahead.
Powell himself will also be closely scrutinized to see if he signals openness to cuts at the September meeting or later this year.
Either way, inflation and Trump’s trade agenda remain areas of concern for the central bank that are unlikely to fade quickly — in part because the whipsawing GDP reading seen Wednesday can largely be attributed to Trump’s tariff agenda.
GDP contracted by 0.5% in the first quarter largely because of surge in imports, which are subtracted from GDP. The removal of that factor in the second quarter appears to have at least helped the GDP surge.
In any case, the Trump pressure campaign is unlikely to ease anytime until rates are lowered to his liking.
Asked during a tour of the Federal Reserve last week of what might lead him to back off his barrage of critiques, the president said, “I’d love him to lower interest rates,” before patting Powell on the back.
Ben Werschkul is a Washington correspondent for Yahoo Finance.