Trump calls for 'jerk' Powell to lower interest rates after latest inflation data

• December CPI showed headline inflation at 2.7% and core inflation at 2.6%, both above the Fed's 2% target but in line with or slightly below economist expectations
• Trump intensified criticism of Powell during a Detroit speech, stating 'that jerk will be gone soon' while calling for 'meaningful' rate cuts despite inflation remaining elevated
• Markets indicate 97.2% probability the Fed will maintain rates at 3.5%-3.75% range at the next meeting, up from 82.3% probability last week

Summary

Key Development: President Trump intensified public pressure on Federal Reserve Chair Jerome Powell to cut interest rates, calling him a "jerk" and "too late Powell" following December's inflation data release.

Inflation Data: The Bureau of Labor Statistics reported December CPI at 2.7% year-over-year (matching expectations), while core CPI came in at 2.6% (slightly below the 2.7% forecast). Both figures remain above the Fed's 2% long-term target, which hasn't been achieved since February 2021.

Political Pressure: Trump's criticism coincides with a DOJ criminal investigation into whether Powell lied to Congress about a Fed building renovation project. Powell countered in a Sunday statement that the investigation is a "pretext" to pressure the Fed on rate policy, warning it threatens the central bank's independence to set rates based on economic conditions rather than political preferences.

Historical Context: Inflation peaked at 9.1% in June 2022, fell to 2.3% in April 2025 (a four-year low), then rebounded to 3% by September as businesses passed through tariff-related costs to consumers.

Market Implications: Despite Trump's demands, markets expect the Fed to hold rates steady. CME FedWatch tool shows a 97.2% probability of no change to the current 3.5%-3.75% target range at the next meeting, up from 82.3% last week. Trump claimed mortgage rates are declining "without the help of the Fed" during a Detroit economic event.

Key Figure: Powell has served as Fed Chair since 2018, originally nominated by Trump during his first term.