Payam Javan: President Donald Trump expressed his intent to replace Federal Reserve Chair Jerome Powell with a candidate favoring lower interest rates, criticizing Powell’s decision to maintain the benchmark rate at 4.25-4.50%. Speaking in the Oval Office, Trump argued that cutting rates by two percentage points could save the U.S. over $600 billion annually, proposing a 1% rate to stimulate economic growth. He suggested Powell step down if unwilling to adjust rates, while indicating flexibility to raise rates later if inflation emerges, citing the economy’s current stability.

During his June 24 congressional testimony, Powell defended the Fed’s cautious stance, awaiting clarity on the economic impact of Trump’s proposed global tariffs. He noted that inflation pressures from tariffs might appear in June or July data, but recent trends suggest contained price increases. Powell indicated potential rate cuts if inflation remains stable. Meanwhile, Trump hinted at a swift decision on Powell’s successor, with Treasury Secretary Scott Bessent emerging as a potential candidate, though Bessent expressed preference to remain in his current role during a June 27 CNBC interview.