President Trump vows to save Americans $600 billion annually by slashing interest rates as he rebukes Federal Reserve Chair Powell for “monetary malpractice.”
Key Takeaways
- President Trump is calling for a drastic two-percentage-point cut in interest rates, which he claims would save the United States $600 billion annually.
- Despite his strong criticism of Federal Reserve Chair Jerome Powell, Trump has stated he has no plans to fire him.
- Vice President JD Vance has backed Trump’s position, calling the Fed’s refusal to cut rates “monetary malpractice.”
- The Fed is maintaining current rates due to concerns about inflation, which some economists suggest could be exacerbated by Trump’s tariff policies.
- Powell has indicated that sustained tariffs could lead to higher inflation, slower economic growth, and increased unemployment.
Trump’s Bold Economic Strategy Targets Interest Rates
President Trump has intensified his criticism of Federal Reserve Chair Jerome Powell, calling for an immediate and substantial reduction in interest rates. During a White House event on June 12, the president advocated for a two-percentage-point cut, asserting that such a move could yield significant fiscal savings. Trump emphasized that current inflation does not pose a serious threat to the economy, making the Fed’s cautious approach unnecessary and potentially harmful to economic growth. His administration views the current interest rate policy as an impediment to the robust economic expansion promised during his campaign.
Despite his vocal disapproval of Powell’s monetary policy direction, President Trump clarified that he has no intention of removing the Fed Chair from his position. However, Trump indicated that he might need to take more assertive measures to influence the direction of interest rates. The president’s economic team has consistently argued that lower interest rates would stimulate investment, boost job creation, and reduce the government’s debt servicing costs, ultimately benefiting average Americans struggling with high prices and stagnant wages.
President Trump lashed out at Federal Reserve Chair Jerome Powell, branding him a "numbskull" for not lowering interest rates. Trump argued that a 2-point rate cut would save the U.S. $600 billion annually, intensifying pressure on Powell amid debates about inflation and economic… pic.twitter.com/m44D5Y6KN7
— Money (@Money) June 13, 2025
Administration’s United Front on Monetary Policy
Vice President JD Vance has emerged as a strong ally in the president’s push for lower interest rates. Echoing Trump’s sentiments, Vance has publicly criticized the Federal Reserve’s current monetary stance. “The president has been saying this for a while, but it’s even more clear: The refusal by the Fed to cut rates is monetary malpractice,” stated JD Vance, Vice President of the United States.
The unified message from the administration highlights the importance of monetary policy in Trump’s economic strategy. The president’s economic advisers argue that the Federal Reserve has been overly cautious, maintaining high interest rates despite signs that inflation is under control. This caution, they contend, is unnecessarily restraining economic growth and making it more difficult for businesses to expand and create jobs. The administration’s position is that a more accommodative monetary policy would help fulfill Trump’s campaign promises of bringing prosperity to working-class Americans.
The Tariff-Interest Rate Tension
A significant point of contention in the economic policy debate centers on the potential inflationary impact of Trump’s tariff policies. Federal Reserve officials, including Powell, have expressed concern that substantial tariffs on imports could drive up consumer prices. “If the large increases in tariffs that have been announced are sustained, they are likely to generate a rise in inflation, a slowdown in economic growth, and an increase in unemployment,” warned Jerome Powell, Federal Reserve Chair.
Some economists predict that Trump’s tariff policies could push inflation to 3.5%-4% by late 2025, complicating the Fed’s ability to reduce interest rates. The administration argues that tariffs are necessary to protect American industries and workers from unfair foreign competition and to incentivize domestic manufacturing. Trump’s economic strategy aims to balance these competing objectives—promoting American industry through tariffs while stimulating growth with lower interest rates—though critics question whether these goals are compatible. The president maintains that with proper execution, both policies can work together to strengthen the American economy.
Economic Implications of Rate Reduction
President Trump’s proposal for a two-percentage-point cut in interest rates is based on his calculation that such a move could save the United States approximately $600 billion annually. These savings would primarily come from reduced government debt servicing costs, potentially allowing for more fiscal flexibility. The administration argues that these funds could be redirected to infrastructure projects, tax relief for middle-class Americans, or other initiatives designed to stimulate economic growth and improve living standards for working families who have been struggling with the effects of inflation.
Market analysts remain divided on the potential outcomes of such a significant rate reduction. Proponents suggest it would boost consumer spending, housing markets, and business investment. Critics, including some within the Federal Reserve, worry about potential asset bubbles and the risk of rekindling inflation. As the debate continues, President Trump remains steadfast in his belief that lower interest rates are essential for fulfilling his economic vision for America and delivering on his promises to the American people who elected him to restore economic prosperity.
