President Trump is fond of telling people how intelligent and well-educated he is. He did receive a Bachelor of Science Degree from the Wharton School of the University of Pennsylvania. Because of his background, I was actually very surprised when he issued a Truth Social post which attacked Federal Reserve Chairman Jerome Powell for failing to lower interest rates. Here is one headline:
“Trump demands that Federal Reserve board wrest full control of central bank from Fed Chair Powell,” PBS news (August 1, 2025),
Trump’s post began:
“Jerome “Too Late” Powell, a stubborn MORON, must substantially lower interest rates, NOW.”
The PBS story continued: “If Powell doesn’t “substantially” lower rates, Trump said, ‘THE BOARD SHOULD ASSUME CONTROL, AND DO WHAT EVERYONE KNOWS HAS TO BE DONE!’ “
Surprisingly, the article did not make an important factual point that would have revealed the call to “the Board” to “assume control” as economic nonsense.
The first hint that the Truth Social post contained a glaring economic error could be gleaned by those who followed the news accounts of the decision not to cut interest rates. An AP story which ran on July 30, noted, “There were some signs of splits in the Fed’s ranks: Governors Christopher Waller and Michelle Bowman voted to reduce borrowing costs, while nine officials, including Powell, favored standing pat.” [Available at https://apnews.com/article/federal-reserve-powell-trump-rates-99d90bab1ba2faa0fc5d4a6106125da7]
So guess what? The decision to not cut interest rates was not made by Powell alone. In fact, there were ten other people involved [my oral version mistakenly said there were eleven others involved]. The decision on whether to raise, lower or leave alone interest rates is a group decision tasked to the Federal Open Market Committee (referred to as the FOMC). The FOMC consists of the seven members of the Federal Reserve Board plus five of the twelve Presidents of Regional Federal Reserve Banks --- four of whom serve on a rotating basis while the President of the New York Fed is a permanent member. [One member was absent from that last meeting.]. Though Chairman Powell has great influence over the decisions of members of the FOMC and he is also the public face of the FED, he is not a dictator. No group (“the Board”) needs to “take control” from Powell. All they have to do is outvote him.
(And my guess would be if at the FOMC discussion, Powell sensed a majority sentiment going in the direction he was opposed to --- say the majority of the FOMC had wanted to cut rates at the last meeting and he didn’t --- he would go along with the majority. I did a quick search of the history of the FOMC deliberations and found only a handful of dissents by a FED Chairman [Mariner Eccles in the 1930s]--- and none since.)
Apparently, Trump forgot his Economics lessons from Wharton. Otherwise, he would not have urged “The Board” to assume control.
[And I am appalled that none of the news accounts I’ve read of Trump’s attack on Powell and his demand that the Board “take control” mentioned this important fact. And in addition, when Trump urged “the Board” to take control he was also in error. The seven members of the Board of Governors alone do not set interest rates --- the FOMC has five other members in addition to the seven Governors].
Bottom line: no “group” had to “take control” from Powell --- as if deposing a dictator. The twelve-member FOMC already has control over interest rates.
The more interesting question is the substantive policy one -- why did the FOMC leave interest rates untouched?
The minutes of that last meeting won’t be released till August 20. But Chairman Powell gave a press conference in which he said “most FOMC members voted in favor of maintaining the current rate because inflation remains above the Fed’s 2% annual target, while also describing the economy as remaining in good shape.” [CBS News Report, July 30, 2025, available at https://www.cbsnews.com/news/federal-reserve-meeting-today-fed-fomc-interest-rate-trump-powell/#]
Some news reports noted how rare it is for there to be public dissent from FOMC decisions and the two dissenters may have been more prescient than their colleagues in the majority. Their point was that they saw little or no danger of the inflation rate increasing except temporarily as a result of Trump’s tariffs, and they feared the economy was slowing down and that it was time to take pre-emptive action to head off a potential recession. Just a handful of days later, the Bureau of Labor Statistics revised job growth statistics for May and June down substantially and reported a dismal number of jobs created (73,000) in July. [For details see the July 31, 2025 release by the Bureau of Labor Statistics available at https://www.bls.gov/news.release/pdf/empsit.pdf]
These three months of very low job growth suggest that the fears of the dissenters are more appropriate than the inflation fears of the majority.
[And of course, Trump decided he couldn’t accept such pitiful job creation numbers when he is telling us over and over again that we have the greatest economy we have ever had --- a quick reversal from his characterization of the Biden economy as “dead.” So, he fired the head of the Bureau of Labor Statistics and claimed she had “rigged” the data to make him look bad. As most journalists and responsible economists have pointed out --- it is IMPOSSIBLE to rig that data. Literally thousands of people are at work collecting and aggregating the data – if there were any dishonesty involved, some whistleblower would have come forward.]
The majority did have a point however about continued uncertainty --- They just do not know what the 3-month or 6-month impact of Trump’s tariffs will end up being. Faced with uncertainty, policy makers like to mark time and do nothing while they wait for more information. I believe that when the minutes of that last meeting are released, we will discover that most members expressed uncertainties and that that was their reason for voting to hold off the next rate cut.
In addition, (and this was not in any of the interviews or releases by members of the Fed) there may very well have been a feeling among FOMC members that Trump’s continued attacks on Powell for not cutting rates made it impossible to cut rates at this time without appearing to give in to political pressure. The FED is supposed to act based on economic data not politics.
I continue to be appalled by the way the media treats statements by Trump that are clearly incorrect. I heard him on TV say he was going to cut gasoline prices by 1400 percent. Very few media outlets immediately noted that any cut higher than 100 percent would mean that the gas station would PAY YOU to fill up! And as I noted above, I wish that media had made it clear that despite what TRUMP said on his truth social posts, the entire FOMC made the decision not to cut rates, not Jerome Powell as an individual. Why doesn’t the media ask Trump if he thinks Powell is the only decision maker? That graduate of Wharton should at least remember that from his economics courses. (but maybe not??)
Michael Meeropol is professor emeritus of Economics at Western New England University. He is the author with Howard and Paul Sherman of the recently published second edition of Principles of Macroeconomics: Activist vs. Austerity Policies.
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