President-elect Donald Trump launched a fresh attack on US monetary policy Tuesday, arguing that borrowing costs remain excessive amid ongoing price pressures, foreshadowing potential friction with the Federal Reserve as he prepares to retake office.
Speaking from his Florida resort, Trump blamed the current administration for economic challenges, aiming for elevated inflation and the central bank’s rate policy.
The Fed’s recent string of rate hikes, the steepest in over two decades, had pushed borrowing costs to 23-year highs. While the central bank has recently pivoted to cutting rates three times, bringing the benchmark rate to 4.25-4.5%, Trump’s remarks suggest this may not be enough for the incoming administration. Consumer prices rose 2.7% in November from a year earlier, exceeding the Fed’s 2% goal.
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Trump’s criticism sets the stage for renewed conflict with Fed Chair Jerome Powell ahead of the central bank’s late January meeting. Their relationship has been strained since Trump’s first term, when he nominated Powell in 2017 but later became one of his harshest critics.
The president-elect’s campaign rhetoric included accusations that Powell harbored political motives and might manipulate rates to benefit Democrats. Nevertheless, Trump indicated he would not seek Powell’s early departure before his term expires in 2026, while Powell has affirmed he would resist any pressure to step down.
Read: Powell: ‘No’ to Resignation Under Trump
There are signs Trump may be tempering his approach to Fed independence. In an interview with Bloomberg, he said: “I think it’s fine for a president to talk. It doesn’t mean that they have to listen.”
The Fed’s policies became a key campaign issue for Republicans, who successfully leveraged voter concerns about the economy despite inflation cooling significantly from its June 2022 peak of 9.1%.
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