Trump: Wash can't raise interest rates and still get nominated; he knows I want to cut rates

U.S. President Trump publicly stated that if his Federal Reserve Chair nominee, Jerome Powell, expressed a willingness to raise interest rates, he would not receive the nomination at all. This statement has once again raised concerns in the market about the independence of the Federal Reserve and could become a focal point during Powell’s Senate confirmation hearings.

On Wednesday, Trump explicitly stated in an NBC News interview, “If he comes in and says ‘I want to raise rates,’ he won’t get the job, period.” Trump emphasized that the Fed should cut interest rates “without a doubt” because “our rates are too high,” and now “we are a wealthy country again.”

When asked whether Powell understands Trump’s desire for lower benchmark rates, Trump responded, “I think he understands, but I think he also wants to do it.” This comment directly reveals the White House’s clear expectations regarding the direction of monetary policy.

Trump’s public pressure could intensify market doubts about the Fed’s independence and add uncertainty to the upcoming personnel confirmation process.

Confirmation Process Faces Resistance

The nomination confirmation process for Powell is expected to undergo rigorous scrutiny, with Federal Reserve independence likely to be a core issue.

Senator Thom Tillis, a member of the Senate Banking Committee, has pledged to block all of Trump’s Fed nominations until the Department of Justice concludes its investigation into the Fed’s renovation projects.

Outgoing Fed Chair Jerome Powell previously described this investigation as a veiled attack on the Fed’s ability to independently set monetary policy. While officials in the Trump administration deny this intention, the President himself has launched months-long pressure campaigns for rate cuts against Powell.

Powell’s Shift in Stance

Former Fed Governor Powell, known for his hawkish stance during his tenure, has recently expressed support for rate cuts.

This former Fed official, who previously built a reputation as an anti-inflation hawk, has recently shown a shift in policy stance, aligning more closely with Trump’s call for rate reductions.

Trump’s recent comments effectively confirm a direct link between the nomination decision and the Fed’s monetary policy stance, which is relatively rare in Fed history and could set a new precedent for future central bank independence.

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