White House Intensifies Pressure on Fed for Dramatically Lower Interest Rates
The White House pressure on Fed Chair Jay Powell intensified on Sunday as senior officials demanded “dramatically lower” interest rates ahead of the Federal Open Market Committee’s (FOMC) key meeting this week. With rates currently at 4.25–4.5 percent, the Trump administration is pushing for an aggressive cut to 1 percent, claiming that high borrowing costs are stifling economic growth.
White House Criticism of Powell
Russell Vought, director of the White House Office of Management and Budget, criticized Powell for being “too late” in cutting rates, while also blasting the Federal Reserve’s $2.5 billion headquarters refurbishment as a “largesse monstrosity.”
“We believe, on a host of fronts, Chairman Powell has been too late,” Vought told CNN. “The president is putting his viewpoints out there with regard to what interest rates should be, which is dramatically lower than where they are.”
Vought’s comments underscore the growing White House pressure on Fed policymakers to act swiftly, even as inflation data remains mixed.
Trump’s Campaign for Lower Borrowing Costs
President Donald Trump has made it clear that he wants interest rates cut to 1 percent. His campaign against Powell has included threats to fire him and highly public criticism of the Fed’s policy stance. Trump even took the unusual step of personally visiting the Fed’s headquarters last week, inspecting its ongoing $2.5 billion refurbishment.
On Friday, Trump hinted that Powell had signaled support for lower rates, saying he had a “very good meeting” with the Fed chair. “The U.S. economy is doing really well,” Trump said, adding that Powell would likely “recommend lower rates” to the rest of the FOMC.
Commerce Secretary Joins the Chorus
U.S. Commerce Secretary Howard Lutnick echoed the call for rate cuts, arguing that current policy does not reflect America’s economic momentum. “The president’s bringing in hundreds of billions of dollars, reducing our deficit. How can that not be the underpinning for us having less debt and lowering rates?” Lutnick told Fox News.
Divisions Within the Fed
The White House pressure on Fed officials comes at a time of growing division among policymakers. Some FOMC governors, including Chris Waller and Michelle Bowman—both Trump appointees—have signaled support for a 25-basis-point cut as soon as Wednesday.
Waller, in particular, has suggested that tariffs imposed by the Trump administration are a “one-off shock” that won’t drive long-term inflation. He also expressed concerns that labor market data is weaker than headline numbers suggest.
Rates on Hold for Now?
Despite the mounting pressure, the Fed is widely expected to hold rates steady at this week’s meeting. Policymakers have expressed a desire to assess the full impact of tariffs, some of which are set to increase to nearly 50 percent on countries that have not finalized trade deals with Washington.
After cutting rates by a full percentage point last year, the Fed has paused further moves in 2025 amid concerns that the trade war could reverse progress toward its 2 percent inflation goal. A potential cut could come at the September FOMC meeting, depending on incoming economic data.
Market Reactions
Markets are closely watching for signs of a policy shift. Jonathan Gray, president of Blackstone Group, told the Financial Times that declining wage inflation and slowing rent increases could give the Fed room to cut rates later this year.
For now, tensions between the White House and the Fed remain high, with Trump’s aggressive campaign raising questions about the central bank’s independence.