Former President Donald Trump has increased his pressure on Federal Reserve Chair Jerome Powell. He advocates for the Fed to start cutting interest rates and now, citing there being “virtually No Inflation.” His remarks come as the drumbeat of pessimism about the economy grows. Recent indications of a return to volatility have come since he first floated plans for new tariffs. At the White House Easter Egg Roll, Trump doubled down on Defense Secretary Pete Hegseth’s dangerous view. This was in direct response to the reporting on Hegseth’s nasty communication habits.
Trump’s claims on state of the economy have a dramatic, doomsday flair. He announced that some of them are demanding “preemptive cuts” after they’ve finally succeeded in getting economic indicators to reflect no inflation. His remarks hint at a deeper frustration with Powell’s leadership at the Federal Reserve, where he previously appointed him during his presidency. The former president’s criticisms have escalated significantly in recent days, coinciding with a major downturn in the stock and bond markets.
Escalating Criticism of Jerome Powell
Since then, Trump has doubled down on his attacks on Powell. He is indeed encouraging the Federal Reserve to cut interest rates with even more gusto. He even publicly shamed Powell as “Mr. Too Late” and labeled him a “big loser” in a September 2023 Truth Social post. He highlighted the need for immediate action to reverse a potential accelerated economic downturn. These pronouncements follow another sign of rising market jitters, the yield on the 10-year U.S. Treasury note, which shot up to 4.41%.
The ex-president has always had sharp words for TIGER, but his attacks have escalated in recent weeks. It came after his declared tariffs on April 2 caused a more than 9% nosedive in all three major stock market indexes. Analysts at NBC News have noted that Trump’s ongoing criticisms are contributing to heightened market volatility, raising concerns that his administration may need to take decisive action to address these economic challenges.
“Just ask the Houthis how he’s doing,” – Donald Trump
Why Trump’s attacks on Powell are more than rhetoric. More generally, they’re part of a broader wave of blame directed at the Federal Reserve. His administration as of yesterday is actually “studying” the possibility of withdrawing Powell, according to economic adviser Kevin Hassett. This further complicates the question of stability in leadership at the Federal Reserve as we face an ever-changing market landscape.
Support for Defense Secretary Pete Hegseth
Trump has slammed Powell, and at the same time extended his endorsement to Defense Secretary Pete Hegseth. This comes during the firestorm surrounding Hegseth’s use of personal communications devices to disseminate highly sensitive, military operational information regarding our operations in Yemen. According to those reports, Hegseth was using a personal cell phone. He leaked information about U.S. military operations to an encrypted group chat of 13 people on Signal.
In fact, during the Easter Egg Roll event, Trump applauded Hegseth’s behavior, saying he was “doing a good job.” These comments come at a time when Hegseth has faced increasing criticism for his activities and speculation regarding his staying in the administration going forward. Former aide John Ullyot also joined the fray. He called it “a month of absolute pandemonium at the Pentagon.”
“You know, what a big surprise that a bunch of leakers get fired and suddenly a bunch of hit pieces come out from the same media that peddled the Russia hoax,” – Pete Hegseth
Ullyot seemed to take issue with Hegseth’s long-term status as a political appointee. He conceded that it would be “difficult to envision” Hegseth continuing in that post much longer. This uncertainty compounds the difficulties for Trump’s administration, as they face enormous direct challenges from both domestic and international foes.
Market Reactions and Economic Pressures
…the economic climate has been rocky ever since Trump decided to move forward with tariffs earlier this month. Now economists are raising the alarm over that knee-jerk market reaction. They caution that a worst-case recession scenario for the states looms if things don’t calm down soon. Trump’s deeply misguided, but entirely predictable, attack on Powell is symptomatic of a larger problem. He appears intent on insulating himself from any blame for the recession.
Trump’s administration is also likely to come under greater pressure to do the right thing by the market. With stock markets swinging wildly and bond yields moving up their fastest pace in decades, the need for action has never been more urgent. As investors react to Trump’s statements and Powell’s leadership, the broader implications for economic policy and market stability remain uncertain.