President Donald Trump is back on his favourite economic hobbyhorse: bullying the Federal Reserve into doing his bidding. His latest social media salvo demanded a full one percentage point rate cut from the Fed, dramatically intensifying his long-running feud with Chair Jerome Powell — mockingly dubbed “Too Late Jay” in his latest outburst.
“Too late at the Fed is a disaster!” Trump bellowed online before offering his signature cocktail of hyperbole and self-congratulation: “Despite him, our country is doing great. Go one point, Rocket Fuel!”

While the size of the cut requested may raise eyebrows (1% moves are typically reserved for pandemics or financial meltdowns), the general plea for lower rates is nothing new from the man who appointed Powell in 2017 and has since made a second career out of attacking him.
Adding more intrigue, Trump hinted aboard Air Force One that Powell’s replacement — whose term ends in May 2026 — is already in his sights. “You’ll hear very soon,” he teased before coyly name-dropping Kevin Warsh, a former Fed governor and perennial favourite of hawkish libertarians.

Fed officials, meanwhile, are scheduled to meet on 17–18 June and — barring a cataclysm — are widely expected to leave rates unchanged. Many are holding fire as they await clarity on the likely economic carnage from Trump’s impending trade tariffs, immigration shake-ups, and fiscal experiments.
One thing’s for sure: a one-point cut would be wildly unconventional unless the economy were on the brink. The last time the Fed moved that aggressively was in March 2020, when COVID-19 locked down the planet. The current backdrop — steady job growth, 4.2% unemployment, and sticky inflation — is hardly comparable.
Still, Trump’s narrative is straightforward: Powell’s restraint is “costing the country a fortune” by inflating borrowing costs. In his words: “There’s practically no inflation, but if it comes back, we can just raise rates again. It’s very simple!”

The reality is far messier. Borrowing costs in the US have risen in recent years as the Fed has fought inflation with higher interest rates. The average interest rate on US Treasuries now hovers around 3.36% — well above the golden years of zero interest policy.
In 2023, interest payments alone reached 3.06% of GDP — the highest burden since 1996. While Trump and Congressional Republicans have promised to rein in spending and slash deficits, their proposed tax cuts are estimated to do the opposite. The Congressional Budget Office pegs the additional interest cost at $551 billion over the next decade — and that’s before we account for any wishful thinking about growth “paying for itself.”

Ironically, the CBO suggests that Trump’s tariffs could reduce interest costs slightly — by reducing imports and thereby reducing borrowing needs. So, trade walls may yet be the President’s accidental fiscal anchor.
For now, though, investors are left trying to square Trump’s fiscal fireworks with a Federal Reserve walking a tightrope. Markets remain sceptical of any near-term rate cuts, and asset managers like JPMorgan and Invesco are warning against premature loosening, especially while job data remains stubbornly strong.
Trump may be shouting for rocket fuel, but the Fed’s job is to keep the engine from exploding. Investors, meanwhile, are left deciphering policy via Twitter while the world’s largest economy flirts with fiscal instability — one 280-character tirade at a time.