On the 29th, the Federal Reserve concluded its two-day regular monetary policy meeting and announced it would maintain the target range for the federal funds rate between 3.5% and 3.75%. This marks the third consecutive time this year that the Fed has decided to hold rates steady.
Since beginning his second presidential term in 2025, tensions between former President Trump and the Federal Reserve have intensified. From publicly and forcefully advocating for rate cuts to criticizing key officials like Chair Powell by name, and even threatening legal action to influence Fed personnel decisions, the ongoing struggle between the White House and the central bank continues to challenge the independence of U.S. monetary policy. This conflict has become a core variable influencing the direction of the American economy and financial markets.
Trump has repeatedly targeted Federal Reserve policies and officials.
Since taking office last year, Trump has focused his criticism on the Fed's high-interest-rate policy, repeatedly attacking Chair Powell in public, claiming that high rates "stifle U.S. economic growth," and strongly demanding immediate rate cuts. Despite Powell's clear stance that "monetary policy is independent of political interference," Trump's pressure has escalated. Threats of lawsuits and dismissals culminated in August 2025, when Trump attempted to forcibly remove Fed Governor Lisa Cook, a proponent of maintaining high rates, citing alleged mortgage fraud. This move shifted the conflict from policy disagreements to a battle over personnel authority. Even when the Fed implemented its first rate cut of 25 basis points in September of that year, it failed to meet Trump's aggressive demands. He continued to pressure for a faster pace of easing, insisting that "U.S. interest rates should be the lowest in the world."
Multiple economic and political motivations underlie Trump's push for rate cuts.
The friction and conflict spanning over a year reflect a convergence of Trump's various economic and political objectives. Data released by the U.S. Treasury Department on March 18 this year showed that the total national debt surpassed $39 trillion for the first time. Analysts project that U.S. debt will exceed $40 trillion this autumn. In a high-interest-rate environment, the federal government's interest payments on its debt have surged significantly, severely exacerbating fiscal deficit pressures. Lowering interest rates would reduce the government's borrowing costs, providing financing support for its large-scale fiscal budget proposals. Politically, rate cuts could boost liquidity, stimulate consumption and investment, and appeal to key voter bases. Simultaneously, it could shift blame for any economic volatility onto the Fed, deflecting potential risks associated with his own policies.
The White House's unconventional tactics risk undermining market confidence and provoking backlash.
Some analysts point out that the Trump administration's attempts to influence the Fed through unconventional methods could lead to concerns that U.S. monetary policy is being swayed by political pressure, shaking market confidence in the Fed's decisions. If the Federal Reserve yields to pressure from the U.S. government and pursues unrealistically low interest rates, it could render monetary policy ineffective as a tool for economic regulation and weaken the stability of the U.S. dollar and the financial system.
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