President Donald Trump on Thursday renewed his public call for Federal Reserve Chair Jerome Powell to cut interest rates, a demand that comes as oil prices surge amid escalating conflict in the Middle East and just days before the Fed’s next policy meeting.
The President’s demand, delivered via a post on his Truth Social account, used a familiar mocking nickname for Powell, calling him “Too Late” and insisting immediate action was needed, rather than waiting for the scheduled March 17 meeting of the Federal Open Market Committee. “Where is the Federal Reserve Chairman, Jerome “Too Late” Powell, today? He should be dropping Interest Rates, IMMEDIATELY, not waiting for the next meeting,” the post read.
The timing of Trump’s demand is particularly pointed, coinciding with a sharp increase in energy prices triggered by disruptions to tanker traffic through the Strait of Hormuz. Oil prices surged past $100 a barrel this week for the first time since 2022, adding to inflationary pressures the Fed is closely monitoring. The national average price for gasoline reached $3.58 a gallon on Wednesday, up 64 cents in the past month, the highest level since May 2024, according to AAA.
The pressure on Powell is further complicated by Trump’s recent nomination of Kevin Warsh to lead the Federal Reserve. Warsh, who is awaiting confirmation, is known to hold a different view on inflation risk than the current Chairman. The situation presents a challenge for Warsh, as the ongoing conflict in Iran makes delivering on potential rate cuts more difficult.
Economists are now questioning the clarity of recent economic data, including a February Consumer Price Index reading that showed inflation holding steady at 2.4%. Joe Brusuelas, chief economist at RSM, argued that “due to the events in the Persian Gulf policymakers and the public can effectively ignore the February U.S. Consumer Price Index.” He anticipates headline inflation could climb back toward 3% in March and 3.5% “or greater” in April as higher energy prices filter through the economy.
Minneapolis Fed President Neel Kashkari acknowledged the potential for a significant economic shock, stating, “Now we need to think about this potentially fresh shock hitting the global economy.” Kashkari’s comments came during a Bloomberg event on Tuesday, highlighting the uncertainty surrounding the conflict’s impact.
Trump’s insistence on rate cuts also clashes with the Fed’s typical operating procedure, which favors making changes at scheduled meetings. The upcoming March 17 meeting will be closely watched, as the 12-member rate-setting panel weighs the risks of rising energy prices against the potential for further economic slowdown.
