In a recent attack President Trump accused Jerome Powell, the chair of the Federal Reserve, of making monetary policy decisions that were "too late and wrong," particularly when compared to the European Central Bank's ECB continuous interest rate reduction, Trump's remarks coincided with the ECB's widely anticipated rate drop of 25 basis points on April 17, 2025, which would lower the ECB's deposit facility rate from 2.5% to 2.25%, marking the sixth successive cut since mid-2023.
Trump highlighted that while the ECB is actively lowering rates to stimulate growth amid global tariff tensions and easing inflation, Powell has been slow to respond. He pointed out that oil and grocery prices, including staples like eggs, are falling, and the U.S. economy is benefiting from tariffs imposed on imports. According to Trump, Powell should have lowered interest rates much earlier and must do so now to keep pace with global monetary policy shifts. He also called for Powell’s removal, stating that his termination “cannot come fast enough” given what Trump perceives as repeated policy missteps.
Several considerations influence the ECB's decision to lower interest rates, with headline inflation falling to 2.2% year over year in March 2025 and core inflation (which does not include volatile energy and food costs) weakening to 2.4%, the eurozone's inflation has moderated, in order to support growth, the European Central Bank ECB has adopted a more accommodative stance due to the economic uncertainties caused by ongoing U.S & imposed tariffs and trade tensions. The disinflation has increased the downside risks to the eurozone economy, which already faces subdued consumer sentiment and a stronger euro, factors that weigh on inflation and exports.
Market expectations strongly favored the ECB’s rate cut, with a near 94% probability of a 25-basis-point reduction according to LSEG data, analysts anticipate that the ECB may continue cutting rates further in 2025, possibly bringing the deposit rate below the neutral level—the rate at which monetary policy neither stimulates nor restrains economic activity, but ECB President Christine Lagarde has signaled caution, emphasizing data dependency and the need to balance growth support with price stability.
Powell's Federal Reserve, on the other hand, has taken a more cautious stance, maintaining rates higher for longer in order to counteract inflationary pressures that have continued to plague the American economy, Trump has criticized this monetary policy divergence, claiming that the Fed unwillingness to cut rates runs the risk of slowing down US economic development and giving Europe a competitive edge, in the midst of a complicated global economic climate defined by tariffs, inflation trends, and geopolitical concerns, Trump comments are indicative of larger political and economic discussions regarding the timing and scope of interest rate adjustments.
Trump highlighted that while the ECB is actively lowering rates to stimulate growth amid global tariff tensions and easing inflation, Powell has been slow to respond. He pointed out that oil and grocery prices, including staples like eggs, are falling, and the U.S. economy is benefiting from tariffs imposed on imports. According to Trump, Powell should have lowered interest rates much earlier and must do so now to keep pace with global monetary policy shifts. He also called for Powell’s removal, stating that his termination “cannot come fast enough” given what Trump perceives as repeated policy missteps.
Several considerations influence the ECB's decision to lower interest rates, with headline inflation falling to 2.2% year over year in March 2025 and core inflation (which does not include volatile energy and food costs) weakening to 2.4%, the eurozone's inflation has moderated, in order to support growth, the European Central Bank ECB has adopted a more accommodative stance due to the economic uncertainties caused by ongoing U.S & imposed tariffs and trade tensions. The disinflation has increased the downside risks to the eurozone economy, which already faces subdued consumer sentiment and a stronger euro, factors that weigh on inflation and exports.
Market expectations strongly favored the ECB’s rate cut, with a near 94% probability of a 25-basis-point reduction according to LSEG data, analysts anticipate that the ECB may continue cutting rates further in 2025, possibly bringing the deposit rate below the neutral level—the rate at which monetary policy neither stimulates nor restrains economic activity, but ECB President Christine Lagarde has signaled caution, emphasizing data dependency and the need to balance growth support with price stability.
Powell's Federal Reserve, on the other hand, has taken a more cautious stance, maintaining rates higher for longer in order to counteract inflationary pressures that have continued to plague the American economy, Trump has criticized this monetary policy divergence, claiming that the Fed unwillingness to cut rates runs the risk of slowing down US economic development and giving Europe a competitive edge, in the midst of a complicated global economic climate defined by tariffs, inflation trends, and geopolitical concerns, Trump comments are indicative of larger political and economic discussions regarding the timing and scope of interest rate adjustments.
