Recent comments by Vice President JD Vance directed at Federal Reserve Chair Jerome Powell have drawn attention to the conflict between the Trump administration and the Fed amid the current economic situation.
Criticism of the Fed and High Rates
Vice President JD Vance criticized the Federal Reserve, stating that its Chair Jerome Powell is 'asleep at the wheel' while interest rates remain high and inflation slows. Vance remarked: *'The Fed has been totally asleep at the wheel. As President Trump says, they’re TOO LATE, both in fighting inflation during Biden and in lowering rates now.'*
Deeper Analysis of Trump's Administration Actions
Powell's reluctance to cut rates is perceived in the White House as a direct threat to the economy. The latest inflation report from the Bureau of Labor Statistics showed that prices barely moved in June: both headline and core inflation numbers rose just 0.1%. Year over year, they landed at 2.4% and 2.8%, slightly above the Fed's 2% goal. Vance pointed out that the Fed's current stance is 'monetary malpractice.'
Potential Personnel Changes at the Fed
Discussions within the Trump administration about removing Powell are gaining momentum. Kevin Hassett, Director of the National Economic Council, stated that Trump *'doesn’t want to fire Powell'*, but added that the administration is actively reviewing whether it has the authority to do so. A possible cause for removal is the Federal Reserve's $2.5 billion renovation project, which has already gone over budget by $700 million. Hassett noted that further actions will depend on the responses sent to Powell concerning the project.
Thus, the Trump administration's criticism of the Fed Chair can be seen as part of a broader discussion regarding current economic policy, where rates remain high and opportunities to lower inflation are viewed quite critically.
