VP JD Vance is questioning Jerome Powell's refusal to cut fees despite lower inflation.
Powell says the Fed needs more economic clarity before rushing to decide on interest rates.
Meanwhile, the possibility of interest rate reductions in September is 51%, but 47% say there is no cut.
Tensions are rising between the White House and the Federal Reserve. Vice President JD Vance has publicly criticized Fed Chairman Jerome Powell for refusing to lower interest rates even as inflation begins to ease. Vance points to the timing of previous rate cuts, suggesting that there may be political discrepancies.
So is the Fed playing it safely or doing politics?
Reduce the demand rate of JD vance
In a recent tweet post, Vice President JD Vance questioned why Jerome Powell cut the rate ahead of the 2024 election, but now he doesn't want to act as inflation is clearly declining.
“I would like to hear a discussion about why Powell cut 50 points just before the election, but can't lower inflation.”
I'd like to hear some debate about why Powell cuts 50 points just before the election, but it's not possible now because of low inflation.
– Jd Vance (@jdvance) June 24, 2025
Vance's criticism showed it was lower than what many experts had expected after the latest government report showed inflation rates rose just 0.2% in May. Despite this, Powell and the Fed are stable.
Vance thinks this is unfair. He says that if interest rates are high, it would cost more for people to borrow money for their homes, cars, starting businesses, etc. Vance now believes the reduction rate will help families and businesses save money.
Trump vs. Powell feud: “Fire him!”
Donald Trump is even more frank. Despite appointed Powell as the Fed chair, Trump repeatedly criticized him.
Over the past year, Trump has called Powell everything from “hard head” to “major loser” and at some point suggested fire him.
Powell says, “There's no rush.”
Meanwhile, Jerome Powell defended the Fed's careful approach during his testimony in Congress on June 24th. According to Powell, the central bank is waiting for more data, particularly on how President Trump's new tariffs are affecting the economy.
He explained that although inflation is cooled, there is still too much uncertainty to act quickly.
Interest rate reductions in September 2025
The Fed had been stable at 4.25%-4.5% last week, but analysts believe a cut could occur in September. According to the forecast platform Polymarket, the Fed has a 51% chance of reducing 25 basis points in September, with a 5% chance of reducing.
On the other hand, there is a 47% chance that interest rate reductions will not occur at all.
Whether rate reductions will come soon or not, one thing is clear. Tensions between politics and policy are intensifying.
