President Donald Trump and Vice President JD Vance are intensifying their criticism of Federal Reserve Chairman Jerome Powell, accusing the central bank of committing ‘monetary malpractice’ for not cutting interest rates. This coordinated attack comes on the heels of a Bureau of Labor Statistics report revealing a modest 0.1% increase in the Consumer Price Index (CPI) for May, both in the all-items and core readings. While annual inflation remains above the Fed’s 2% target, at 2.4% and 2.8% respectively, the administration views the slowing inflation as justification for immediate rate cuts.
In a social media post on X, Vice President Vance directly echoed President Trump’s calls for lower rates, stating that the Fed’s inaction constitutes ‘monetary malpractice.’ This strongly worded condemnation highlights the growing pressure on the Fed to ease monetary policy, even as some economists and Fed officials express concerns about the potential long-term inflationary effects of existing tariffs.
President Trump has repeatedly urged a full percentage point cut from the current fed funds rate target of 4.25%-4.5%, a demand that has so far been unmet. While Trump himself hadn’t yet commented publicly on the latest CPI data, his previous public statements clearly indicate his continued dissatisfaction with the Fed’s approach. The upcoming FOMC meeting next week is unlikely to result in a rate cut, with market predictions assigning zero probability to such a move. However, traders are anticipating a potential rate cut in September, according to CME Group data.
Administration officials have publicly cited the easing inflation and moderating labor market as strong arguments for lower rates. Yet, experts remain divided. Elyse Ausenbaugh, head of investment strategy at J.P. Morgan Asset Management, notes the challenging position the Fed finds itself in, suggesting that while the data might suggest a rate cut, the ongoing uncertainty and the risk of acting prematurely could cause the Fed to remain cautious. The coming weeks will be crucial in observing how the Fed responds to the mounting pressure from the White House and the evolving economic landscape.
