Trump Says Rate Cut Will Be Litmus Test For New Fed Chair
Trump’s comments were a key signal to potential new Fed chairs on what the president would expect from them if they were to be nominated to lead the central bank.
President Donald Trump indicated he would judge a new Federal Reserve chair by whether they immediately move to cut interest rates.
Trump responded “yes” when asked in an interview with Politico if a quick reduction of borrowing costs would be a litmus test for his handpicked central bank leader.
“Yes. Well, this guy too ... should too,” Trump told Politico in the interview released Tuesday, referring to current Fed Chair Jerome Powell. “I think he’s a combination of not a smart person and doesn’t like Trump.”
Trump’s comments were a key signal to potential new Fed chairs on what the president would expect from them if they were to be nominated to lead the central bank.
White House National Economic Council Director Kevin Hassett, whom Bloomberg has reported as the frontrunner in the race for Fed chair, said last month the data suggests that the central banks should cut rates right “right now.”
On Monday Hassett told CNBC it would be irresponsible for the Federal Reserve to lay out a plan for where it aims to take interest rates over the next six months, saying the central bank chair’s job is to watch the economic data and then make decisions.
Trump earlier this year repeatedly called for the Fed to get its benchmark down below 2%, versus the current target of 3.75% to 4%. Powell and his colleagues are widely expected to take the benchmark down by 25 basis points in a decision due Wednesday.
Powell’s tenure as chair is set to end in May 2026, though his term as a Fed governor doesn’t expire until 2028.
Trump has repeatedly said he’s already made up his mind about who he wants to lead the Fed, but said he my not publicly announce his decision until early next year.
In addition to Hassett, other finalists have included Fed Governors Christopher Waller and Michelle Bowman, former Fed Governor Kevin Warsh and BlackRock’s Rick Rieder.
Trump didn’t respond to questions in the Politico interview about if he had spoken with his potential candidates to lead the central bank.
