Senator Elizabeth Warren has voiced strong criticism of President Donald Trump following his call for the Federal Reserve to lower interest rates. This exchange comes just seven months after Warren herself urged the Fed to take similar action. During an appearance on CNBC, Warren expressed concern that Trump’s comments could lead to a market crash.
Trump recently took to Truth Social to express his frustration with Federal Reserve Chairman Jerome Powell, suggesting that Powell’s dismissal was overdue. He has been vocal about his dissatisfaction with the current federal funds rate, which influences various interest rates across the economy. In his post, Trump stated, “Powell’s termination cannot come fast enough!” and criticized Powell for being slow to respond to economic conditions.
Warren reacted strongly to Trump’s remarks, interpreting them as a threat to Powell’s position. She emphasized that the Federal Reserve is an independent agency, and removing its chairman requires a valid reason, as established by a 1935 Supreme Court ruling. This ruling suggests that disagreements over monetary policy do not constitute sufficient grounds for removal.
Warren warned that if the president could fire the Fed chairman at will, it could destabilize the markets. She stated, “If Chairman Powell can be fired by the president of the United States, it will crash the markets in the United States.” She highlighted the importance of keeping monetary policy separate from political influence to maintain economic stability.
Warren has been a consistent advocate for lowering interest rates, even during periods of high inflation. As the leading Democrat on the Senate Banking Committee, she has argued that reducing rates is essential for making housing more affordable and preventing a potential recession. In a letter to the Fed, she suggested a rate cut of 75 basis points, warning that hesitation could endanger the economy.
Trump’s recent comments come as the European Central Bank prepares for its seventh interest rate cut, which he pointed out in his post. He criticized Powell for not acting sooner, claiming that the U.S. should have followed suit long ago. As tensions rise between the two political figures, the implications for the economy and financial markets remain a point of concern for many observers.