Trump Criticizes Powell for Being “Too Late”! Will History and Current Events Truly Repeat Themselves? The Federal Reserve Faces a Dilemma.
Federal Reserve
Jerome Powell has recently faced frequent criticism from President Trump, earning the new nickname “Too Late.” This is not merely a war of words; it also rekindles the long-held market perception of the Federal Reserve as being “behind the curve.” With new tariff policies and a chaotic mix of economic signals, whether Powell’s wait-and-see strategy is correct has become a focal point of market scrutiny.
Trump’s Full Assault: Is Powell a “Clueless Fool”?
Immediately after the Federal Reserve decided to keep interest rates unchanged, Trump launched an attack on Truth Social, calling Powell a “fool” and added the label “Too Late Jerome Powell.” He believes that current inflation is “almost nonexistent” and that the Federal Reserve should have cut rates long ago. It is worth noting that the Fed’s preferred core PCE index showed zero growth in March, making Trump’s comments not entirely unfounded. However, the new tariffs he spearheaded have only been in effect for about a month, and the economic impact has yet to fully materialize; thus, a hasty rate cut may be premature.
History Repeats? The Federal Reserve is Always “Behind the Curve”
From Arthur Burns’ reluctance to raise rates in the face of stagflation in the 1970s, to Alan Greenspan’s sluggish response to the internet bubble, and Ben Bernanke’s miscalculation of the severity of the subprime mortgage crisis, criticism of the Federal Reserve for acting too slowly has never ceased. “Whether raising or cutting rates, the Fed is always a step behind,” said Dan North, a senior economist at Allianz Trade North America. “They want to wait for clear data before taking action, but by that time, the economy is usually already in recession.”
A Policy Dilemma: Is Inaction the Safest Choice?
Nevertheless, North also pointed out that in the current uncertain environment, Powell’s decision to keep rates unchanged may indeed be the “most correct mistake.” On the one hand, Trump’s trade policies may trigger rising inflation; on the other hand, there are no clear signs of a slowdown in overall economic activity. In this dual risk scenario, “inaction” seems to be the most conservative and rational choice.
Confused Market Signals: Strong Economic Performance but Weakening Confidence
According to the latest data, the overall U.S. economy has not shown significant signs of recession, with real activity in manufacturing and services remaining resilient. However, there are cracks in market sentiment: nearly 90% of S&P 500 companies mentioned tariff risks during earnings calls, and consumer confidence indices have shown signs of decline. Powell expressed strong confidence at a press conference, stating that the current labor market performance still aligns with the goal of “maximum employment,” and described the overall economy as “robust.”
Missing Opportunities by Not Cutting Rates Early? Divergent Views Among Market Experts
Opinions differ among market experts regarding the decision not to cut rates preemptively. Krishna Guha, Global Policy Head at Evercore ISI, noted that one of Powell’s reasons is that “waiting does no harm,” but this kind of inaction could come at a cost. He added that Powell also said, “We don’t know what the right course of action is,” which seems more reflective of the current situation. Joseph LaVorgna, a former economic advisor to the Trump administration, is also skeptical. He believes that if the Federal Reserve waits for the labor market to worsen before cutting rates, “it will already be too late.” According to Wall Street wisdom, “the labor market is the last to know there is a recession,” and if the Federal Reserve bases its decisions on this, it risks being “behind the curve” once again.
Is Powell’s Wait-and-See Approach Correct Amid Trump’s Criticism?
Powell’s current approach may have its rational basis, but market and political pressures are gradually intensifying. Historically, it has never been easy for the Federal Reserve to strike a balance between “stability” and “foresight.” If, as Trump claims, it is indeed “too late,” this label may not solely belong to Powell but could reflect a long-standing cultural issue within the Federal Reserve.
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