President Donald Trump called for urgent interest rate cuts on Monday, blaming Federal Reserve Chairman Jerome Powell for the weakening U.S. economy. Trump, frustrated by recent market losses and rising economic risks, accused Powell of failing to act quickly. In a social media post, he said Powell should cut rates “pre-emptively” to prevent further damage. His statements caused sharp declines in U.S. stock markets and added pressure on the dollar. Trump’s growing tension with Powell has raised fresh concerns about the Federal Reserve’s independence and its role in managing the economy.
Trump Demands Swift Action from Federal Reserve
In a series of public posts, President Trump referred to Jerome Powell as “a major loser” and “Mr. Too Late.” He expressed deep dissatisfaction with the Federal Reserve’s recent decisions and its cautious stance on interest rates. Trump warned that the economy could slow down even more if the Fed does not respond fast enough.
Trump wrote, “We need to cut rates now, not later. Jerome Powell’s delay has already hurt us.” He stressed that immediate action was needed to stop further economic decline.
Markets React to Political Pressure
Trump’s comments triggered strong reactions in the financial markets. The S&P 500 fell by 2.4% on Monday, pushing its year-to-date loss to 12%. The Dow Jones dropped 2.5%, while the tech-heavy Nasdaq tumbled over 2.5%, making it 18% lower than in January.
The dollar also took a hit. The dollar index fell to its weakest point since 2022 when measured against major global currencies. Investors, typically confident in U.S. assets, started pulling out due to rising uncertainty.
Government bond yields rose as investors demanded higher returns to hold onto U.S. debt, signaling deep market unease.
Gold Reaches New High as Investors Seek Safety
With stock markets falling and the dollar weakening, investors rushed to safer assets. Gold prices surged past $3,400 per ounce—a new all-time high. Experts say gold gains value during financial uncertainty, as it is seen as a secure investment.
“Gold often acts as a safety net when markets are volatile,” said Sara Lin, a financial analyst at Global Metals Insight. “This jump shows people are nervous.”
Asia Watches Cautiously
Stock markets across Asia showed only slight movement on Tuesday afternoon. Japan’s Nikkei 225 and Australia’s ASX 200 each dropped by about 0.1%. Hong Kong’s Hang Seng Index rose slightly by 0.2%, but overall, the region reflected global investor caution.
“Asia is watching the U.S. closely,” said Lee Ming, an economist based in Singapore. “A rate cut from the Fed could change global market behavior, but political pressure adds risk.”
Longstanding Friction Between Trump and Powell
This isn’t the first time Trump has clashed with the Federal Reserve. Though he appointed Jerome Powell in his first term, he has criticized him often. Trump has called Powell slow, unfit, and even suggested removing him from office.
After the 2020 election, Trump demanded aggressive rate cuts and warned that Powell’s decisions were hurting growth. The tension between the president and the central bank head has continued to rise.
Just last week, Trump publicly stated, “His termination cannot come fast enough,” referring to Powell.
Legal Concerns Over Powell’s Position
Trump’s threats have stirred legal debate. The Federal Reserve is designed to operate independently from the executive branch. This protects it from political influence and ensures stable economic policies.
Powell has said in the past that he believes the president cannot legally fire him. In 2019, Powell stated, “I fully intend to serve my full term.”
Despite this, Trump’s senior economic adviser mentioned on Friday that the administration was reviewing legal options. Experts say any move to remove Powell would face serious legal and political challenges.
Fed Stands Firm on Policy Direction
So far, the Federal Reserve has not responded directly to Trump’s latest comments. However, Powell and other Fed officials have stood by their decisions. They argue that interest rates should be adjusted based on data, not politics.
In recent months, the Fed has highlighted mixed economic signals. While inflation remains a concern, job growth has slowed, and consumer spending has dipped.
“We make decisions based on facts, not pressure,” said a senior Fed official who asked to remain anonymous. “The public expects us to stay independent.”
Broader Economic Impact
The U.S. economy has faced several challenges in recent months, including trade tensions, high borrowing costs, and weakening global demand. These issues have added to fears of a potential slowdown.
Some economists agree with Trump’s call for rate cuts, but others warn that political pressure could harm the Fed’s credibility.
“Rate cuts may help short term,” said Professor Alan Rees of Columbia University. “But the damage to trust in our institutions could last much longer.”
President Trump’s push for quick interest rate cuts has shaken markets and raised questions about the Fed’s future. As stock prices fall and gold rises, investors are watching closely. Whether the Federal Reserve gives in to pressure or holds its ground could shape the next phase of the U.S. economy.