Trump-Powell Rift Widens
Author: Greg Valliere
June 12, 2025
CAN JEROME POWELL HANG ON? His term as Fed Chairman expires next spring, but the long knives are out now — fueled by a cool inflation report yesterday.
WITH PRESIDENT TRUMP’S PLATE very full, JD Vance got the Powell-bashing assignment yesterday, He accused the Fed Chairman of “monetary malpractice” for not lowering rates.
THE FED’S RESPONSE IS THAT A RATE CUT could be premature without much clarity on trade, but Trump and his aides believe yesterday’s tentative China deal is a breakthrough. We’ll see — the goal of finalizing mid-summer trade deals almost certainly will be stretched out until fall or later.
OUR SENSE IS that the economy is softening, now with a new concern: anxiety in big cities as unrest spreads, giving Trump his pretext to send in the troops.
THIS ADDS to several major concerns — the Big Beautiful bill, with its huge tax cuts, is on thin ice, and there’s growing anxiety over a conflict between Iran and Israel.
AS IF THIS ISN’T ENOUGH, the White House is floating the idea of nominating a temporary new Fed Chairman, or a co-chairman who would speak out on monetary policy. This sounds un-workable, and Powell is adamant that he has legal standing to finish his term.
THAT MAY NOT DISSUADE TRUMP, who is floating names of possible successors; Treasury Secretary Scott Bessent’s name was floated yesterday. This could irritate the markets, to say the least, but Trump simply cannot resist breaking things without a plan once they are broken.
THE DETAILS ON TRADE negotiations are daunting, and we think it will be winter before most of the big deals are finalized.
OUR BIG CONCERN is the Mideast; U.S. personnel have been evacuated from Iraq and elsewhere in recent days, as still more bloodshed looms.
TRUMP CAN’T CONTROL Benjamin Netanyahu, who seems increasingly determined to destroy Tehran’s nuclear facilities — a potentially huge wild card for Fed policy.
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