Trump demands Powell cut rates as Iran conflict drives up energy prices

In what has become a now-familiar refrain, President Donald Trump on Thursday pressed Federal Reserve Chair Jerome Powell to cut interest rates immediately, rather than wait for the next policy meeting.

"Where is the Federal Reserve Chairman, Jerome "Too Late" Powell, today? He should be dropping Interest Rates, IMMEDIATELY, not waiting for the next meeting," Trump wrote in a Truth Social post using a mocking nickname for Powell. 

The comments come ahead of the Federal Open Market Committee’s March 17 meeting, when the Fed’s 12-member rate-setting panel will decide whether to change its key interest rate. That benchmark rate helps determine what consumers and businesses pay to borrow money — including for mortgages, car loans and credit cards.

The meeting also comes as the conflict involving Iran has fueled a run-up in energy prices, adding to inflation pressures the Fed is watching closely — and complicating Trump’s pledge to lower costs for Americans.

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This week, oil prices surged past $100 a barrel for the first time since 2022 as fallout from the U.S.-Israeli conflict with Iran continued to roil global markets and investors priced in the risk of tighter supply. 

With oil higher, gasoline and diesel prices are rising fast.

Trump’s demand, however, runs up against how the Fed typically operates.

Rate changes are typically made at scheduled meetings. Still, the Fed has cut rates between meetings during crises, most recently in 2020 during the COVID-19 pandemic.

Trump, who nominated Powell to lead the Fed in 2017, has intensified his public campaign in recent months, calling for rates to fall as low as 1% as part of his push to stimulate growth.

For his part, Powell held off initially on rate cuts as the Fed assessed the economic impact of Trump’s evolving trade agenda. That wait-and-see posture kept the Fed’s benchmark rate at 4.25% to 4.5% for a period. The Fed has since lowered rates, and the target range now stands at 3.50% to 3.75%. But even after rate cuts, Trump has escalated his attacks on Powell and the central bank.

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Trump’s renewed demands also sharpen the long-running tension between the White House and an institution designed to operate independently, with Fed officials insisting rate decisions will be driven by economic data, not political pressure.

That tension has now expanded beyond monetary policy. Federal prosecutors have opened a criminal investigation tied to Powell’s prior testimony to Congress about cost overruns on the Fed’s headquarters renovation project.

Powell, in a rare video statement, called the probe "unprecedented" and described it as another salvo in what he described as Trump's pressure campaign on the central bank to cut rates. 

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The unusually public response followed days of private consultations with advisors and stood out for a Fed chair known for a measured approach.

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The political stakes are heightened by the timing: Powell’s term as chair ends May 15. 

Trump has nominated former Fed governor Kevin Warsh to succeed him, putting the Fed’s next moves and Powell’s final months under even brighter scrutiny.