Investing.com-- U.S. President Donald Trump is laying the groundwork to blame the Federal Reserve under Chair Jerome Powell for any economic weakness resulting from his trade tariffs, the Wall Street Journal’s Nick Timiraos wrote on Monday.
Trump is signaling that he will blame the Fed if the central bank does not concede to his demands for interest rate cuts soon, Timiraos said, in a process that could also delegitimize the central bank’s independence.
Timiraos’ comments come after Trump engaged in a social media tirade against the Fed and Chair Powell, calling him a “major loser” and “Mr. Too Late” amid demands that Powell cut interest rates soon.
Trump warned that the U.S. economy could slow if the Fed did not cut, and claimed that there was “virtually no inflation.” He had last week also called for Powell’s ouster.
Powell was appointed by Trump during his first term, and is set to remain as Fed Chair until May 2026.
Timiraos- who earned the moniker of “the Fed whisperer” for accurately predicting each of the central bank’s interest rate decisions since 2022- warned that even if Trump was unable to oust Powell, his efforts to delegitimize him could cause lasting damage to the Fed’s standing, especially given that the central bank has long sought to remain unaligned.
Trump had also badgered Powell during his first term to stop raising interest rates and cut them. But the economic backdrop this time around appears different, especially given that inflation is a much bigger concern today, Timiraos said.
Powell has so far signaled little intent to cut interest rates, having recently flagged even more uncertainty due to Trump’s trade tariffs on the U.S.’ biggest trading partners. Powell warned that the tariffs- a highlight of which is a 145% duty on China- could cause lasting increases in inflation.
Trump’s recent attack on Powell sent U.S. stock markets into a tailspin, while also battering the dollar and pushing up Treasury yields.