On June 28, 2025, President Trump once again criticized the Federal Reserve for keeping the benchmark interest rate unchanged in the range of 4.25% to 4.50%. He reiterated his intention to appoint a new chairman who supports a significant interest rate cut and called for rates to be lowered to 1%.
President Trump, speaking at the Oval Office in the White House during a media interview, stated that he would only appoint a new chairman willing to lower interest rates, urging the central bank to substantially reduce rates to 1%. He said, “Whoever takes over will cut rates. If I think someone will maintain the current rate, then I won’t appoint them. I will choose someone who wants to cut rates.”
“I believe our current rate should be 1%,” Trump said he has instructed his team not to issue any debt with terms longer than nine months until the new Federal Reserve chairman takes office.
During the interview, President Trump harshly criticized current chairman Jerome Powell as “stubborn” and “foolish,” and hinted that he may announce a successor list before the fall. Trump stated this week that he has identified three to four candidates to succeed the Federal Reserve chairman.
“If he (Powell) wants to resign, I would be very happy to see that,” Trump said.
The market widely expects the Fed to initiate rate cuts in the latter half of this year. Trump’s pressure on Powell has sparked speculation that he may choose a “shadow Federal Reserve chairman” who supports rapid interest rate cuts.
The Federal Open Market Committee (FOMC) has kept rates unchanged at four consecutive meetings. The current federal funds rate is maintained in the range of 4.25% to 4.50%, although not reaching the highs of the early 2000s or 2006 (which was around 5.25%), it is one of the highest levels since the 2007 financial crisis, significantly higher than the near-zero rates during the 2020 pandemic.
Federal Reserve board member Christopher Waller is seen as a potential successor to Powell, supporting a rate cut as early as July. Another candidate, current Chairman of the White House National Economic Council Kevin Hassett, also supports reducing borrowing costs.
Meanwhile, Treasury Secretary Scott Bessent is also on the list of candidates, noting that the yield on two-year U.S. Treasury bonds suggests the Fed should lower rates.
Another candidate, former Fed board member Kevin Warsh, believes that the central bank should focus on fighting inflation, indicating a more hawkish stance than other candidates.
However, many believe that such a shadow strategy may backfire.
The FOMC is a committee of 12 voting members responsible for determining interest rate policies, where the chairman and members discuss and vote on rate adjustments collectively. Therefore, interest rate decisions are not solely dictated by the chairman but are determined by the voting team together.
University of Chicago scholar Raghuram Rajan believes that the president’s influence on the Fed’s internal decisions is limited, especially in influencing regional Federal Reserve Bank presidents or other board members.