Face-to-face confrontation: Trump meets with Powell at the White House

On May 29, local time, The Federal Reserve (FED) Chairman Jerome Powell met at the White House at the invitation of U.S. President Donald Trump in a highly publicized meeting. This was the first meeting between the two since Trump began his second term and their first confrontation since November 2019. According to the official statement from the FED, the talks focused on the development of the U.S. economy, covering key topics such as economic rise, employment, and inflation.

Background: The long-term game between Trump and Powell

Tensions between Trump and Powell have a long history. Since Trump nominated Powell as Fed chairman in 2017, the two have repeatedly confronted each other publicly over monetary policy disagreements. Trump has long advocated low interest rates to stimulate economic growth, especially at the beginning of his second term, when his criticism of the Fed intensified in the face of inflationary pressures and market volatility triggered by high tariffs. In April 2025, Trump repeatedly bombarded Powell through social media "real social", calling him "slow to act" and "playing politics", and even hinted that he might seek to remove Powell, triggering widespread concerns about the Fed's independence.

The "reciprocal tariff" policy implemented by Trump after taking office—imposing tariffs of 10% to 60% on major trading partners—has led to an increase in import costs for the United States and a rise in inflation expectations. According to calculations by Yale University's Budget Lab, the tariff policy could result in an additional annual expenditure of $4,900 for the average American family, and the consumer confidence index has also fallen to its lowest point in nearly three years.

Focus of the talks: the interest rate cut battle and economic outlook

According to multiple sources on platform X, Trump clearly expressed his dissatisfaction with The Federal Reserve (FED) maintaining a benchmark interest rate of 4.25%-4.5% during discussions. He believes that the current inflation level is nearing the FED's target of 2%, and lowering interest rates can not only stimulate consumption and investment but also alleviate the negative impact of tariff policies on the economy. A White House spokesperson quoted Trump as saying, "Not lowering interest rates puts us at a disadvantage in our competition with China." Trump's position reflects his consistent economic strategy: to boost short-term economic growth through loose monetary policy, in conjunction with his "America First" trade protectionism.

However, Powell demonstrated the Federal Reserve's consistent independence during the talks. According to the Federal Reserve's statement, Powell made no commitments regarding monetary policy expectations, emphasizing that policy adjustments will be based on the latest economic data to support the dual mandate of maximum employment and price stability. He particularly noted that the Trump administration's high tariff policies could push up inflation and suppress economic rise, and the Federal Reserve needs to remain cautious in its policy-making to assess the long-term effects of these external factors.

The inflation data from May 29 added context to the discussions. According to the latest released Personal Consumption Expenditures (PCE) price index for April, the inflation rate has fallen to 2.2%, indicating that the Federal Reserve's (FED) tightening policies in recent years have had some effect. However, the market generally expects that tariff-driven price increases will become apparent in the coming months, and Wall Street analysts believe that the Federal Reserve (FED) may delay interest rate cuts until September or even later.

social media public opinion reaction

On platform X, accounts like @WallStTV pointed out that Powell reiterated the Federal Reserve's non-political stance during the talks, attempting to calm concerns about political interference. However, some voices believe that Trump's public pressure signifies his intention to intervene in the Federal Reserve has moved from "remote shouting" to a "substantive stage." @hongsv11 commented: "Trump just wants to cut interest rates, it's the cornerstone of his economic policy." In the market, after the news of the talks was released, U.S. stocks experienced increased volatility, with the Dow and S&P 500 index briefly declining during the day, but ultimately closing higher, reflecting investors' complex emotions regarding policy uncertainty.

Li Fuyi, an associate researcher at the Institute of Foreign Economic Research of the National Development and Reform Commission, analyzed that Trump's high tariffs and immigration restrictions have increased economic uncertainty, leading The Federal Reserve (FED) to be more inclined to wait and see rather than take hasty action.

The independence of the Federal Reserve is once again under test.

The independence of The Federal Reserve (FED) has always been the cornerstone of the American financial system. However, Trump has recently threatened to dismiss Powell multiple times and even privately discussed replacing him with Kevin Warsh, who is more inclined towards easing policies, raising concerns in the market about the credibility of the dollar. Wang Zaibang, a senior researcher at the Taihe Institute, warned that if The Federal Reserve (FED) loses its independence, it will undermine the foundation of the dollar's 80-year hegemony and could trigger turmoil in the global financial markets.

Despite Trump stating on April 22 that he had "no intention" of removing Powell from office, this meeting shows that his pressure has not diminished. Powell, through public statements and comments after the meeting, emphasized that his term lasts until May 2026 and that the law protects him from political dismissal, trying to stabilize market expectations.

Outlook: The Crossroads of Economy and Policy

The recent meeting between Trump and Powell at the White House not only continues the long-term game between the two, but also reflects the complex situation of the American economy under high tariffs, high debt (36 trillion dollars), and the global trend of "de-dollarization." Goldman Sachs predicts that if U.S. Treasury yields remain above 6% for a long time, the dollar's status as a reserve currency could be shaken within a decade.

The next move of the Federal Reserve (FED) will be hinted at in the June interest rate meeting, where the market widely expects rates to remain unchanged, but Powell's statements and the dot plot will provide clues for the future policy path.