Trump and Powell Hold Surprise White House Meeting
Fed Stresses Monetary Policy Will Be Based on Economic Data and Outlook
On May 29 (local time), Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), held his first meeting at the White House with President Donald Trump following Trump's return to office. Powell emphasized that future monetary policy decisions would be based on economic indicators, independent of political considerations. This statement is interpreted as a reaffirmation of his commitment to maintaining the independence of monetary policy in the face of President Trump's ongoing pressure for interest rate cuts.
Donald Trump, then U.S. President, and Jerome Powell, Chairman of the U.S. Federal Reserve, during their meeting in November 2017 / Reuters·Yonhap News
Following the meeting between Chairman Powell and President Trump, the Fed released a statement saying, "Chairman Powell emphasized that the path of monetary policy will depend entirely on incoming economic data and its implications for the economic outlook." The statement further noted that Powell "also made it clear that, in accordance with the law, monetary policy will be set to achieve maximum employment and price stability, and that decisions will be based solely on careful, objective, and non-political analysis."
This surprise meeting, held at the invitation of the White House, saw President Trump and Chairman Powell discuss key trends in the U.S. economy, including growth, employment, and inflation. Since returning to office, President Trump has repeatedly demanded interest rate cuts from Chairman Powell. In doing so, he has used harsh language to criticize Powell, calling him "Mr. Too Late," "a loser," and "a know-nothing fool." Tensions between the two have escalated, with even the possibility of Powell's early dismissal?despite his legally protected term?being raised.
During the meeting, Chairman Powell once again made clear his determination to pursue monetary policy based on economic indicators, undeterred by political pressure from the White House. In contrast, according to White House spokesperson Karoline Leavitt, President Trump told Powell that failing to cut interest rates would be a mistake and would put the United States at an economic disadvantage in its relations with China and other countries.
The Fed has maintained a cautious stance on resuming monetary easing, even as concerns about stagflation (rising prices during an economic slowdown) have grown due to President Trump's high-tariff policy. Earlier, at the Federal Open Market Committee (FOMC) meeting held on May 7, the Fed kept its benchmark interest rate unchanged at 4.25-4.5% for the third consecutive time. In the FOMC minutes released the previous day, the Fed stated, "Participants noted that if the outlook for growth and employment weakens and inflation persists, the Fed's two policy goals could face a difficult trade-off," and added, "Given the increased uncertainty about the economic outlook, the committee judged that it would be appropriate to take a cautious approach until the purely economic effects of changes in government policy become clearer."
In the market, there is speculation that the Fed may resume rate cuts as early as September due to concerns over price increases caused by tariffs. According to CME FedWatch, the federal funds futures market on this day reflected about a 67% probability that the Fed would cut rates by at least 0.25 percentage points in September. The probability of rates remaining unchanged stood at around 33%.
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