The Three Reasons Trump Despises Jerome Powell

It's not just that he won't do Trump's bidding. He's a reminder of Trump's weakness.

Official White House photo by Andrea Hanks

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President Trump is very mad at Federal Reserve chair Jerome Powell, ostensibly because Powell hasn’t said he’s going to lower interest rates as Trump has demanded. In fact, there are two other very important reasons Trump despises Powell, which I explain below. But first, today’s presidential tantrum:

Calling Powell “a major loser” is not in fact going to make it more likely that interest rates come down. The Fed is taking a wait-and-see approach at the moment, which seems reasonable given the contradictory implications of Trump’s tariffs. On one hand, the tariffs will almost certainly raise prices, and the Fed’s usual response to inflation is to raise interest rates. On the other, the tariffs — along with the firing of tens or hundreds of thousands of federal workers, the degradation of all kinds of government services, and the likelihood that the upcoming Republican budget will include brutal cuts to programs like Medicaid — may well set off a ruinous recession, and the Fed’s usual response to a recession is to lower interest rates.

It’s quite the dilemma. And we should note that the Fed chair doesn’t make interest rate decisions on his own; the Fed’s Open Market Committee arrives at a consensus at its quarterly meetings on what to do (though of course the chair wields significant influence). In the meantime, Powell and the Fed are standing pat.

Trump is livid about this and is floating the idea of firing Powell, which according to the law as it currently exists (i.e. pending the Supreme Court rewriting it) the president does not have the power to do. And the markets are not exactly pleased:

This is itself a reflection of how investors have realized that Trump is an unhinged toddler who cannot be trusted not to crash the world economy. After all, if he was the economic genius he fancies himself to be, they’d be thrilled at the prospect of him replacing the Fed chair with someone who would respond to his every demand, since that would guarantee limitless prosperity. Apparently, anyone who doesn’t acknowledge his wisdom is BAD AT BUSINESS:

Reason #2 Trump hates Powell: he’s too honest

Anyone whose memory goes back more than two decades probably still finds it odd that Powell speaks in public regularly, and when he does so he sounds, if not completely freewheeling, at least like a human being. During Alan Greenspan’s 18-year tenure as Fed chair between 1987 and 2006, Americans got used to the chair’s public utterances being so maddeningly vague that it was impossible to discern what he thought or might do. He once told Congress, only barely exaggerating, that “Since I’ve become a central banker, I’ve learned to mumble with great incoherence. If I seem unduly clear to you, you must have misunderstood what I said.” His two successors, Ben Bernanke and Janet Yellen, were only slightly less cautious in public.

Compared to that, Powell is refreshingly candid and forthcoming; while he may not say precisely what the Fed plans to do in the future, he doesn’t try to be inscrutable. Which at a moment like this means he will be quoted saying things that don’t reflect well on Trump. Most notably, he said recently that there is a “strong likelihood” that Trump’s tariffs will raise consumer prices (which of course they will), and that creates a “challenging scenario” for the Fed as it seeks to hold overall inflation down. Absolutely no one could argue that he was wrong, but it still led to a wave of negative stories about Trump’s economic policies, stories that no doubt enraged the president.

Reason #3: Powell is a reminder of a past Trump hates

But the most important reason Trump hates Powell is that he is a vestige of a past Trump is trying to overcome, a period when Trump was constrained by established systems and swayed by advisors he later came to view as traitors.

When Trump nominated Powell to be Fed chair in 2017, he had already been on the Fed board of governors for years. He was a Republican, but was known as a pragmatic centrist. In other words, he was exactly the kind of figure any Republican president would appoint. While there is little reporting on the decision-making process, at the time Trump was surrounded by reasonably sane economic advisors, some of whom would later quit in disgust.

At that point there was little indication that Trump had been manipulated into picking Powell, or that he was unhappy with the Fed at all; my guess is they said “Everybody likes Jay Powell, he’ll be a steady hand,” and Trump said “Sure, he seems fine.” He did interview a few candidates for the job, including Yellen, whom he called “a wonderful woman who has done a terrific job.” And with both inflation and unemployment low, he had little reason to be dissatisfied.

But over time, Trump’s displeasure with the establishment Republicans inside and outside his administration grew. In 2019, he tried to nominate buffoonish right-wing pundit Stephen Moore and failed presidential candidate and renowned nincompoop Herman “Ubeki-beki-beki-beki-stan-stan” Cain to the Federal Reserve board; both withdrew after Senate Republicans made clear they couldn’t get confirmed. The rejection of his picks no doubt left a sour taste in Trump’s mouth.

Which brings us to today. One of the central themes of Trump’s second term is a lack of constraint: He is not only unconstrained emotionally, he has made sure to staff his administration only with cultists who will not only never question him, but will work like busy beavers to remove any bureaucratic or legal impediments to the swift realization of his will. Republicans in Congress have abdicated any shred of independence; just about whatever he asks for, he’ll get. This is the presidency Trump always wanted.

Yet there Jay Powell sits, wielding power over the economy yet refusing to do Trump’s bidding. Right after the election Powell was asked at a press conference whether he’d resign if Trump asked him to, and he gave a one-word answer: “No.” One can only imagine how angry that made Trump, and he is angry still.

But there’s good news for the president, and bad news for the rest of us: Powell’s term is up next year, and Trump will get to appoint someone new to chair the Federal Reserve. He can pick Don Jr. or Lee Greenwood or whoever he saw on Fox that morning, and the Senate will probably confirm his choice. By that time, who knows how bad things will have gotten.