Trump Criticizes Powell Again! Urges Interest Rate Cut by 2 Percentage Points: Could Save US$600 Billion Annually

On Thursday local time, US President Donald Trump once again fiercely criticized Fed Chairman Jerome Powell and further urged him to cut interest rates.

Trump claimed at the White House that a 2 percentage point interest rate cut could save the US $600 billion annually, "but we can't get this guy to do it."

"We're spending $600 billion a year, and this $600 billion is because some fool is sitting here saying, 'I don't think there's enough reason to cut interest rates right now'," Trump said.

Trump also added that if inflation rises, he agrees with the US Fed raising interest rates.

"But inflation has come down," he said, "I may have to force some measures."

In April this year, Trump threatened to fire Powell, which panicked investors. After fluctuations in the financial markets, he backtracked, saying he had no intention of firing Powell. In his speech on Thursday, Trump reiterated that he "would not fire" Powell.

Just a few hours before Trump made these remarks, the US Department of Labor reported that the Producer Price Index (PPI) for May rose less than some economists had expected.

Data released the previous day showed that the US Consumer Price Index (CPI) rose 0.1% MoM and 2.4% YoY in May, both lower than market expectations of 0.2% and 2.5%, respectively. The core CPI, excluding food and energy costs, rose 2.8% YoY, remaining at its lowest level since March 2021 and also below market expectations of 2.9%.

Both sets of data have allayed some concerns about a tariff-induced surge in inflation and prompted Trump and his allies to increase pressure on the US Fed. Including Trump himself, three Trump administration officials have pressured Powell over the past two days.

Shortly after the CPI data was released on Wednesday, Trump posted on his social media platform, Truth Social, saying, "The CPI numbers just came out, great numbers! The Fed should cut interest rates by a full percentage point."

Trump added that if the Fed could cut interest rates, it would significantly reduce the interest the US government pays on its upcoming debt, "so important!!!"

Meanwhile, US Vice President Vance echoed on the social media platform X: "The President (Trump) has been saying this for a while, but it's now clearer: the Fed's refusal to cut interest rates is a dereliction of duty in monetary policy."

"If (Powell) does his job and cuts interest rates, the amount of money we could save is unbelievable.""The economy is ready. It's easy. Inflation is low, come on. He must fulfill his responsibilities as soon as possible," US Commerce Secretary Lutnick said on Wednesday evening.

The US Fed's next interest rate meeting will be held on June 17-18. Despite strong pressure from Trump, traders almost entirely do not believe that the US Fed will cut interest rates at its upcoming rate decision, and they see little likelihood of the central bank taking action to cut interest rates at its July meeting.

In contrast, traders expect a higher likelihood of an interest rate cut in September, with the current probability standing at around 76%, according to data from CME Group.