【By Observer Net, Wang Yi】On June 30 local time, US President Trump once again escalated his attack on Federal Reserve Chair Jerome Powell, using a chart listing the interest rates of major central banks around the world with handwritten notes to urge Powell to cut interest rates as soon as possible.

"Jerome 'Too Late' Powell and his entire board should be ashamed for allowing this to happen in the United States," Trump posted on his self-created social media platform "Truth Social" that day, accusing these people who do "one of the easiest yet most respected jobs in the US" of "failing", "the committee just stood by and did nothing, so they are also to blame," and "we should pay 1% or even better interest."

At the same time, Trump also attached a chart at the end of the post, ranking the main central banks around the world from lowest to highest interest rates, and wrote a handwritten note, accusing Powell of "causing the US to lose a lot of money" and that he would "continue to do so".

White House Press Secretary Karoline Leavitt publicly showed the physical copy of the chart at a press conference on June 30 and revealed that Trump had sent it to Powell. Trump wrote on the chart, "You're as usual, 'too late'."

White House Press Secretary Karoline Leavitt shows the chart and notes written by Trump to Federal Reserve Chair Jerome Powell during a press conference. Screenshot from video

American cable news network CNN reported on June 30 that in recent months, Trump has mercilessly criticized Powell, throwing words like "fool", "numbskull", and "stupid person" at him. Although Powell initially started his term in 2018 under Trump's appointment, Trump has always been very dissatisfied with Powell because the Fed has not lowered interest rates as he wished.

Trump has repeatedly claimed that due to the Fed maintaining high interest rates, the federal government is trapped in a situation where it pays huge interest on its debt. Leavitt also stated at the press conference on the 30th that "the American people want to borrow money at lower costs, and they should have been able to do so, but now the interest rates are still too high."

The Washington Post pointed out on July 1 that before Trump, many US presidents have urged the Fed to cut interest rates, but the Fed's interest rate decisions permeate the financial industry, affecting the fees paid by millions of people for mortgages and other types of loans. Historically, pressure from presidents on the Fed often backfires.

Although some central banks in Europe, Mexico, and other countries and regions have cut their benchmark lending rates multiple times this year, the Fed has not. According to CNN analysis, one important reason is the major policy shift since Trump took office. Fed officials said that before considering further rate cuts, they want to see the impact of these changes on the economy first.

On June 18, the US Federal Reserve ended a two-day monetary policy meeting, announcing that the target range for the federal funds rate remained unchanged at 4.25% to 4.50%, making the fourth decision to keep the rate unchanged.

Powell maintained restraint and never directly responded to Trump's threats. At a Senate hearing on June 24, he emphasized that the Fed "does not consider political factors when setting interest rate policies," and its focus is on curbing inflation and maintaining a healthy labor market.

CNN noted that Powell's stance has earned some support from American legislators and global central bank peers. After her speech at the annual forum of European central bank governors held in Sintra, Portugal on June 30, European Central Bank President Christine Lagarde even called for applause for Powell, saying that he "embodies the standard of a brave central bank governor."

The Washington Post analyzed that the Fed remains cautious about cutting rates too early, considering that the Fed was slow to respond to inflation after the pandemic, leading to inflation far exceeding the 2% target. The last time inflation was below that target was in early 2021, and current price levels are slightly above the target. Most economists predict that inflation will rise above 3% for the rest of the year.

David Wilcox, a senior researcher at the Peterson Institute for International Economics and head of US economic research at Bloomberg Economics, said that given this context, the Fed's cautious approach to relaxing monetary policy prematurely is understandable.

But Trump can't understand, or pretends not to understand, the Fed's actions.

In his letter to Powell, he mentioned that if the Fed lowers interest rates, it will save "trillions of dollars." At the same time, The New York Times pointed out that Republicans are trying to pass a comprehensive tax and spending bill that is expected to significantly increase the federal deficit, and high interest rates will force the government to allocate more funds to pay interest on the debt.

Yahoo Finance commentators also said that Trump may have another reason to want interest rates to drop quickly. He frequently attacks Powell to create a "villain." Once inflation surges, unemployment rises, or something else happens, he can blame this "villain," saying it's all Powell's fault for waiting too long to cut rates, and that the Fed chairman should listen to a smarter president's advice.

Although Powell's term ends in May 2026, the Trump administration seems to have hinted that the president will announce the next Fed chairperson in advance. If Trump does this, it would break the tradition of US presidents announcing the successor to the Fed chair only in the final months of the incumbent's term.

CNN analysis states that once a candidate nominated by Trump emerges, this person will inevitably become the "shadow Fed Chair." Experts warn that if the new nominee starts challenging Powell's policy positions, it could cause market turmoil, weaken the dollar, and push up long-term interest rates.

The report states that the competition for the top position at the Fed is now limited, besides the current Treasury Secretary Bassett, the remaining candidates include former Fed Governor Kevin Warsh, current Governor Christopher Waller, White House National Economic Council Director Kevin Hassett, and David Malpass, who headed the World Bank during Trump's first term.

Trump revealed in an interview on Fox Business Network on June 29, "We will appoint someone who can cut interest rates into the Fed."

When asked about his view on Warsh becoming the Fed Chair, Trump replied, "Kevin (Warsh) is very talented, but I'm not sure if it will be him," but "he won't do things the way Powell does."

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Original: https://www.toutiao.com/article/7521997330680513065/

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