Trump Ramps Up Criticism of Powell While Citi Sees Rate Cut in September on Cooling Inflation

Trump Pressures Powell as Citi Maintains September Rate Cut Forecast Amid Softer Inflation

Former President Donald Trump has intensified his criticism of Federal Reserve Chair Jerome Powell, reigniting political pressure on the central bank as financial markets increasingly bet on an interest rate cut in September. Trump’s renewed attacks come as Citi maintains its forecast for a September rate cut, citing recent data showing a cooling in U.S. inflation.

Speaking at a recent campaign event, Trump accused Powell of keeping interest rates “unnecessarily high” and claimed that current monetary policy is stifling economic growth. “The Fed is too slow and too rigid,” Trump said. “Powell needs to start cutting rates to support American businesses and consumers.”

Trump’s remarks echo his previous confrontations with Powell during his presidency, when he frequently criticized the Fed for not lowering rates aggressively enough. While the Federal Reserve operates independently, political pressure from prominent figures like Trump often adds to the public debate around monetary policy.

Meanwhile, Citigroup analysts continue to project that the Fed will begin easing rates as early as September, citing recent economic data that suggests inflation is moderating. The latest Consumer Price Index (CPI) and Producer Price Index (PPI) reports have both come in softer than expected, fueling hopes that the worst of the inflation surge may be behind the U.S. economy.

“Our baseline remains a September rate cut,” Citi’s chief U.S. economist Andrew Hollenhorst noted in a research report. “The disinflationary trend is becoming more entrenched, giving the Fed room to shift its stance without jeopardizing price stability.”

Financial markets have responded accordingly, with traders increasingly pricing in a September rate cut. Futures markets now reflect a more than 60% probability of a cut at the Fed’s September meeting, according to CME’s FedWatch tool.

However, not all policymakers are ready to declare victory on inflation. Several Fed officials have emphasized that they need more consistent evidence of inflation returning to the 2% target before adjusting rates. They also remain concerned about potential upside risks, such as wage growth and global energy price fluctuations.

Powell himself has maintained a cautious tone, recently stating that while inflation has eased, “it is too early to confidently say that we have achieved sustained price stability.”

The combination of Trump’s mounting political rhetoric and Citi’s market forecast highlights the growing debate over the Fed’s next move. While softer inflation data supports the case for easing, the Fed’s leadership remains wary of moving prematurely.

As the September meeting approaches, markets will closely watch incoming data, Powell’s statements, and the political discourse that may continue to shape expectations around U.S. monetary policy.