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Donald Trump sparred with the Federal Reserve chair, Jerome Powell, on Thursday during a rare presidential visit to the central bank’s headquarters.Trump was continuing his campaign to pressure the Fed to cut interest rates and was visiting its Washington headquarters to view costly renovations he has suggested are tantamount to fraud.Having branded Powell a “numbskull” for the Fed’s recent decisions not to cut rates, Trump has turned up the pressure on Powell with criticism of the $2.5bn bill for renovating the Fed’s historical buildings.Powell and Trump stood in hard hats inside the Fed’s construction site. Urging the Fed chair to stand closer to him, Trump alleged that the bill for the renovations would now cost $3.1bn.“It looks like it’s about $3.1bn – it went up a little bit or a lot,” said Trump. The usually unflappable Powell looked visibly irritated, closed his eyes and shook his head. “I am not aware of that,” said Powell.Handed a piece of paper by Trump, Powell scanned it and said the new figure included the cost of renovations for the Martin Building, a different Fed office that was renovated five years ago. “It’s not new,” said Powell.Asked by a reporter what he would do if a project manager went over budget, Trump said: “I’d fire him.“Look, I would love to see it completed,” Trump said. “I don’t want to put that in this category.”The president backed away from earlier statements in which he had suggested he would fire Powell, a suggestion that has rattled stock markets. Trump said: “To do that is a big move, and I just don’t think it’s necessary, and I believe he’s going to do the right thing.”The visit to the Fed comes less than a week before the central bank’s 19 policymakers gather for a two-day rate-setting meeting, where they are widely expected to leave the central bank’s benchmark interest rate in the 4.25%-4.50% range.Trump has demanded that the Fed lower rates by three percentage points. Trump has repeatedly demanded that Powell slash US interest rates and has frequently raised the possibility of firing him.Ahead of Trump’s visit, Fed staff escorted a small group of reporters around the construction sites. They wove around cement mixers and construction machines, and spoke over the sound of drills, banging and saws.Fed staff pointed out security features, including blast-resistant windows, that they said were a significant driver of costs, in addition to tariffs and escalations in material and labor costs.Reuters contributed to this story More
During his latest trip to Washington, OpenAI’s chief executive, Sam Altman, painted a sweeping vision of an AI-dominated future in which entire job categories disappear, presidents follow ChatGPT’s recommendations and hostile nations wield artificial intelligence as a weapon of mass destruction, all while positioning his company as the indispensable architect of humanity’s technological destiny.Speaking at the Capital Framework for Large Banks conference at the Federal Reserve board of governors, Altman told the crowd that certain job categories would be completely eliminated by AI advancement.“Some areas, again, I think just like totally, totally gone,” he said, singling out customer support roles. “That’s a category where I just say, you know what, when you call customer support, you’re on target and AI, and that’s fine.”The OpenAI founder described the transformation of customer service as already complete, telling the Federal Reserve vice-chair for supervision, Michelle Bowman: “Now you call one of these things and AI answers. It’s like a super-smart, capable person. There’s no phone tree, there’s no transfers. It can do everything that any customer support agent at that company could do. It does not make mistakes. It’s very quick. You call once, the thing just happens, it’s done.”The OpenAI founder then turned to healthcare, making the suggestion that AI’s diagnostic capabilities had surpassed human doctors, but wouldn’t go so far as to accept the superior performer as the sole purveyor of healthcare.“ChatGPT today, by the way, most of the time, can give you better – it’s like, a better diagnostician than most doctors in the world,” he said. “Yet people still go to doctors, and I am not, like, maybe I’m a dinosaur here, but I really do not want to, like, entrust my medical fate to ChatGPT with no human doctor in the loop.”His visit to Washington was aligned with the Trump administration’s unveiling of its “AI action plan”, which is focused defining and easing some regulations and promoting more datacenters. Altman’s latest engagement is with the federal government under Donald Trump, which has taken on a new tune compared with years past. While much has changed with the tech over the years, under the Biden administration, OpenAI and its rivals asked the government to regulate AI. Meanwhile under Trump, they talk of accelerating to beat China.At the fireside chat, he said one of his biggest worries was over AI’s rapidly advancing destructive capabilities, with one scenario that kept him up at night being a hostile nation using these weapons to attack the US financial system. And despite being in awe of advances in voice cloning, Altman warned the crowd about how that same benefit could enable sophisticated fraud and identity theft, considering that “there are still some financial institutions that will accept the voiceprint as authentication”.skip past newsletter promotionafter newsletter promotionOpenAI and Altman are already under way on their big pivot to Washington, attempting to crash a party at which Elon Musk once held the golden ticket. Along with announcing plans to open his company’s first office in Washington next year, Altman faced the Senate commerce committee for his first congressional testimony since his high-profile appearance in May 2023 that propelled him on to the global stage. More
For months, Donald Trump has ranted on social media and, at one point, threatened to fire the Federal Reserve chair, Jerome Powell. Last week, he took on a new, unusual tactic: a handwritten note.“You have cost the USA a fortune and continue to do so. You should lower the rate – by a lot!” Trump wrote to Powell, whom he calls “Too Late” in one of his less compelling nicknames.That Trump has targeted the Fed isn’t surprising. In the midst of Trump’s trade war, consumers and business owners alike have expressed anxiety about the economy. The stock market tanked in April, when the president announced the highest of his tariffs, and only went on the upswing when he pulled back the bulk of his levies.The Fed has the ability to sway the US economy through its ability to adjust interest rates. When rates are high, as they have been for the last few years, borrowing money becomes more expensive. This means higher rates for mortgages, business loans, credit card debt and more. People are less likely to invest when interest rates are high, which can slow activity in the economy. The Fed lowering interest rates would excite investors and spur economic activity, but the price could be steep in the long run.But how much sway does Trump really have over the Fed?While Trump’s aggression toward the Fed, particularly his personal attacks against Powell, are a remarkable departure from the relationship a US president typically has with the Fed, economists say the structure of the central bank limits the amount of power Trump actually has – at least in the short term.Historically, the Fed has been a nonpartisan, independent central bank within the federal government. Economists have found that countries without central banks are prone to high inflation and unemployment.“A central bank’s independence is pretty much the only thing macroeconomists know of that’s a free lunch,” said Jason Furman, a former economic adviser to Barack Obama. “When you look at authoritarian leaders that have effectively taken over the central banks, like in Turkey, you can end up with 70% inflation rates and really, really big economic problems.”In late June, Trump told reporters that he has zeroed in on “three or four people who I’m going to pick” to replace Powell. When the treasury secretary, Scott Bessent, whose name has been floated, was asked if he would take the job, Bessent said: “I will do what the president wants.”That the White House is already talking about replacing Powell almost a year out from the end of his term has raised concerns that a new appointee would act as Trump’s “shadow chair”, or someone who has power over Powell before he leaves office.But those familiar with the Fed’s structure say that a powerful “shadow chair” is unlikely, especially since the Fed’s structure encourages consensus among its leaders.When setting interest rates, the Fed chair doesn’t act alone. The chair is one of 12 members of the Federal Open Market Committee (FOMC), which meets eight times a year to vote on any adjustments to the interest rate.The amount of control Trump has over who gets on to the FOMC is limited. The committee has seven Fed governors who serve 14-year terms. Those governors are appointed by the president and confirmed by the Senate. The other five members are presidents of regional Federal Reserve banks, who are selected within the Federal Reserve system.During the next four years, because of upcoming term limits, Trump will have the ability to appoint two of the 12 members of the FOMC – what would be a small fraction of the committee.“They’re going to have a hard time persuading other people on the committee to go along with anything like what Trump wants,” Furman said.skip past newsletter promotionafter newsletter promotionRyan Sweet, chief US economist for Oxford Economics, said that Fed governors on the FOMC already voice dissenting views on the economy in public, but come together to form a consensus during their meetings.“It’s built [into the Fed] that they go into a meeting and they’ve got to come to a consensus on what the outcome is,” Sweet said.And even though Trump may want to replace Powell before his term is up, the supreme court signaled that the president can’t constitutionally fire him. Sweet pointed out that the court’s preemptive protection of the Fed chair has likely soothed stock markets, which had gone into a panic when Trump first threatened to oust Powell.Powell, whom Trump first appointed in 2018, has publicly resisted the president’s efforts to sway the Fed. He has said he would not step down if Trump asks and has said the Fed will not lower interest rates prematurely, at risk of raising inflation.In his most pointed statement against Trump’s economic policies, Powell said that the Fed paused interest rate cuts “when we saw the size of the tariffs”.“Essentially all inflation forecasts for the United States went up materially as a consequence of tariffs,” Powell said. “We didn’t overreact, in fact we didn’t react at all.” This article was amended on 7 July 2025. Powell said the Fed paused interest rate cuts due to Trump’s tariffs, not interest rate increases. More
The Federal Reserve issued a rare, strongly worded statement on Thursday after chair Jerome Powell spoke with Donald Trump at the White House on Thursday morning, holding firm on the central bank’s independence amid pressure from Trump to lower interest rates.The three-paragraph statement emphasized the Fed’s independent, non-partisan role in setting monetary policy based on economic data.“Chair Powell did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming economic information and what that means for the outlook,” the statement read.Powell told Trump that he and other Fed officials “will set monetary policy, as required by law, to support maximum employment and stable prices and will make those decisions based solely on careful, objective, and non-political analysis”, according to the statement.That the Fed, which tends to be extremely reserved with public statements, issued the brief memo shows that officials are aware of Trump’s pressure campaign and are standing firm on the Fed’s independence.At Thursday’s White House press briefing, press secretary Karoline Leavitt said that the Fed’s statement is “correct” but that Trump “did say that the Fed chair is making a mistake by not lowering rates”.Historically, presidents show deference to the Fed, respecting the central bank’s independence. But over the last few months, Trump has tried to publicly pressure Powell to lower interest rates, as the Fed did last year, though officials say that the economy – thrown into a tailspin from Trump’s trade war – has become too unstable to continue lowering rates.After Trump’s “liberation day” in early April, when he announced a slate of tariffs that ended up crashing US stock markets, Trump wrote on social media: “This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates. He is always ‘late,’ but he could now change his image, and quickly.”Powell, who was appointed during Trump’s first term in 2018, has resisted the pressure from Trump and has warned that high tariffs could lead to inflation and, earlier in May, said that officials are “in no hurry” to cut interest rates – all statements that seem to have put Trump on edge.“‘Too Late’ Jerome Powell is a FOOL, who doesn’t have a clue,” Trump wrote after the Fed’s meeting.Trump had previously threatened to fire Powell, though it’s unclear whether the president has the power to do so. Last week, the supreme court allowed Trump to follow through on his dismissal of officials on the National Labor Relations Board, the panel that oversees labor disputes, but judges noted that the Federal Reserve is a “uniquely structured, quasi-private entity” – implying that it likely won’t be so easy for Trump to get rid of Powell. More
The Federal Reserve kept interest rates on hold and called out growing dangers in the US economy amid Donald Trump’s erratic rollout of an aggressive trade strategy.Jerome Powell, the US central bank’s chair, cautioned that the president’s tariffs were likely to raise prices, weaken growth and increase unemployment if maintained.Fed policymakers cautioned that “the risks of higher unemployment and higher inflation have risen” as they opted to maintain the benchmark interest rate for the third time in a row. “Uncertainty about the economic outlook has increased further,” they said in a statement.With inflation expectations – how consumers think prices will move – rising,Powell, the Fed chair, said the “driving factor” appeared to be Trump’s tariffs.At a press conference, he said: “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.”The US president has repeatedly demanded in recent months that the Fed cuts rates – and even raised the prospect of firing Powell, before walking back the comments – as Trump’s tariffs plan appeared to knock the US economy.The Fed has been sitting on its hands for months, however, citing heightened uncertainty. It last cut rates in December, to a range of between 4.25% and 4.5%.As Trump pushed ahead last month with sweeping tariffs on imported goods from much of the world, Powell cautioned this would probably raise prices and slow growth – despite the administration’s pledges to revitalize the US economy and reduce the cost of living for millions of Americans.US gross domestic product (GDP) shrank for the first time in three years during the first quarter, raising fears of recession as Trump’s tariffs – and threats of tariffs – cast a shadow over the world’s largest economy.Asked whether he was trying to take responsibility for stronger parts of the economy, while blaming his predecessor, Joe Biden, for any sign of weakness, Trump told NBC’s Meet The Press: “I think the good parts are the Trump economy, and the bad parts are the Biden economy. Because he’s done a terrible job.”After Fed policymakers finished their latest two-day meeting on Wednesday, the central bank reiterated in its statement that they would “carefully assess incoming data, the evolving outlook, and the balance of risks” ahead of future meetings.Its callout of greater risks in the US economy amounted to “a thinly veiled critique of the new administration’s import tariffs”, said Samuel Tombs, chief US economist at Pantheon Macroeconomics, “and represents an assertion of independence”.Addressing reporters after the meeting, Powell said he could not provide a timeframe for rate cuts. “We are going to need to see how this evolves,” he said. “There are cases in which it would be appropriate for us to cut rates this year. There are cases in which it wouldn’t. And we just don’t know.”While concern over the economic outlook is mounting, Powell stressed there had been no “big economic effects” in the data so far. “People, they are worried now about inflation, they are worried about a shock from the tariffs,” he said. “But they really haven’t – that shock hasn’t hit yet.”Asked how Trump’s demand for rate cuts affected the Fed’s latest decision, and the difficulty of his job, Powell responded bluntly. “Doesn’t affect doing our job at all,” he said.He reserved perhaps his briefest response for when a reporter asked what he thought when Trump said last month he had “no intention” of firing him – days after saying his termination could not come fast enough. “I don’t have anything more for you on that,” said Powell. More
Stock markets have risen around the world after Donald Trump said his tariffs on China would come down “substantially” and he had “no intention” of firing the chair of the US central bank, Jerome Powell.Weeks of tough talk on trade from White House officials have rattled investors and Trump now appears to be softening his tone. The president told reporters in Washington on Tuesday he planned to be “very nice” to China in trade talks and that tariffs could drop in both countries if they could reach a deal, adding: “It will come down substantially, but it won’t be zero.”Overnight in Asia, Japan’s Nikkei rose by nearly 2%, Hong Kong’s Hang Seng was up 2.4% and the South Korean Kospi gained 1.6%.The rally spread to Europe in early trading on Wednesday, with the UK’s FTSE 100 index up 1.6%, while the Italian FTSE MIB rose by 1.1%. Germany’s Dax gained 2.6% and France’s Cac 2.1%.Meanwhile, US stocks opened on a high Wednesday morning, with the Dow rallying over 800 points, and the Nasdaq Composite up over 3%. The rally stalled in the afternoon but all the major stock markets managed to end the day higher.On Wednesday, the US treasury secretary, Scott Bessent, also took a softer, optimistic tone on China in remarks delivered at the Institute of International Finance in Washington DC, saying that China “knows it needs to change”.“If China is serious on less dependence on export-led manufacturing growth and rebalancing toward a domestic economy … let’s rebalance together,” Bessent said. “This is an incredible opportunity.”Bessent told investors in a private meeting on Tuesday that he expects a “de-escalation” of the trade war between China and the US in the “very near future”.“‘America First’ does not mean America alone. To the contrary, it is a call for deeper collaboration and mutual respect among trade partners,” Bessent said on Wednesday.Investor confidence also grew after Trump told reporters he would not fire Powell, the chair of the US Federal Reserve, reversing the previous day’s losses triggered by the president calling the central bank boss a “major loser”.The president has criticised the Fed chair repeatedly for refusing to cut interest rates and last week hinted that he believed he could dismiss Powell before his term as the head of the central bank comes to an end in May next year.Trump wrote on his social media platform, Truth Social, last week that Powell’s termination “could not come fast enough”, after the Fed chair raised concerns about the impact of trade tariffs on the American economy.However, the suggestion from the White House that the US central bank will remain independent helped stocks to rise on Wednesday, as well as the prospect of lower tariffs on Chinese imports to the US.The US dollar, which hit a three-year low on Tuesday before recovering, rose by 0.25% against a basket of major currencies.Oil prices also rose on Wednesday, with Brent crude rising above $68 (£51) a barrel amid hopes that lower tariffs will be less damaging to the global economy. The rise was also led by new US sanctions targeting Iranian liquefied petroleum gas and the crude oil shipping magnate Seyed Asadoollah Emamjomeh.Meanwhile, gold, which is traditionally viewed by investors as a safe haven asset during volatile periods, retreated from the new high of $3,500 (£2,620) an ounce it hit on Tuesday, to trade at about $3,307. More
Wake up! When the most sober of global institutions, the International Monetary Fund, abandons its usual technocratic calm to sound the alarm on the political roots of global financial instability, it’s time to pay attention. The IMF is warning of a non-negligible risk of a $1tn hit to global output, as Donald Trump’s erratic “America first” agenda – part oligarchic enrichment scheme, part mobster shakedown – collides with a perfect storm of global financial vulnerabilities.Such a shock would be equivalent to a third of that experienced in the 2008 crisis. But it would be felt in a much more fragile and politically charged environment. This time, the crisis stems not just from markets but from the politics at the heart of the dollar system. The IMF’s latest Global Financial Stability Report sees the danger in Mr Trump’s trade policies, especially his “liberation day” announcements, which have pushed up America’s effective tariff rate to the highest in over 100 years.The IMF put investors on notice that Trumpian volatility was taking place as US debt and equities – especially tech stocks – were overvalued. It cautions that hedge funds have made huge bets that have gone sour, requiring them to sell US treasuries for cash and potentially deepening the chaos in bond markets. Ominously, the IMF draws the comparison, first made by the analyst Nathan Tankus, with the “dash for cash” in March 2020 during Covid, when the Federal Reserve rescued US treasury markets directly. Developing nations, already grappling with the highest real borrowing costs in a decade, may now be forced to take on even more expensive debt – the IMF warns – just to cushion the blow from Mr Trump’s new tariffs, risking a dreaded “sudden stop” in capital flows.At the heart of this chaos stands the US, the very country meant to uphold the global financial architecture. Just over a week ago, Adam Tooze of Columbia University wondered if markets had begun to “sell America” after US long-maturity bond prices fell precipitously. He thought that markets were no longer just responding to economic fundamentals but to politics as a systemic risk factor. In this case: Mr Trump’s tariff threats and his increasing political pressure on Fed’s chair, Jerome Powell. In essence, Prof Tooze gave us the theory; the IMF just confirmed the data.The US president’s continued attacks on the Fed chair over the weekend have only added to a flight from US equities, bonds and the dollar itself. The money is fleeing to safe havens such as gold. Some of the loss has been clawed back, but at what cost? Investors aren’t just jittery about inflation or growth – they’re hedging against political chaos. That might explain the seemingly divergent IMF messaging: blunt systemic warnings in its report versus the soothing market-facing comments from a senior official at the fund’s press conference. This is central bank diplomacy. The institution is signalling that it is worried while trying not to spark a self-fulfilling panic in treasuries and the dollar.The real concern here is not technical dysfunction in treasury markets or the mechanics of the Fed, which are the bedrock of the global financial system. It’s about the politicisation of the monetary-fiscal nexus under a Trumpian regime that is fundamentally hostile to the norms of liberal-democratic governance. When even the dollar is no longer a safe haven, what – or who – can be?Do you have an opinion on the issues raised in this article? If you would like to submit a response of up to 300 words by email to be considered for publication in our letters section, please click here. More
Donald Trump early on Thursday condemned the Federal Reserve chair, Jerome Powell, for not lowering US interest rates, and expressed a wish for him to be gone from his role.The US president lambasted Powell as “always too late and wrong” in a post on his Truth Social platform. Trump noted that the European Central Bank (ECB) was poised on Thursday to lower interest rates again, without mentioning that the body has been responding to the chaos caused by Trump’s initiatives on tariffs.Addressing reporters later in the day, Trump claimed Powell would resign if he asked him to. Powell himself has said that he would not resign if asked to do so by the president.Trump has been pressuring Powell to cut US interest rates for months, even though the central bank is independent of the administration in setting monetary policy and the White House typically does not publicly lobby the Federal Reserve.The ECB had been expected to cut interest rates for the seventh time this year in order to prop up economic growth, and then did so not long before US markets were due to open. Powell enraged Trump on Wednesday night by warning that the president’s sweeping tariffs could raise inflation. That would make the Fed even more hesitant to cut interest rates.Christine Lagarde, the ECB president, in explaining the reasons why it has – unlike the Fed – cut interest rates, said “the economic outlook is clouded by exceptional uncertainty” because of Trump’s tariffs, which constitute a negative demand shock.Lagarde was speaking after cutting the ECB’s main deposit rate by 25 basis points to 2.25%.Europe had been preparing another interest rate cut following the global financial turmoil caused by Trump’s tariffs push, in which he has gone back and forth on whether, when and how deeply to tax imports from other countries, and on which countries, since he returned to the White House for a second term.He retreated sharply earlier this month from his decision to impose tariffs worldwide, pausing most of the charges for 90 days, although most notably not on China, after markets plunged and US government bonds – traditionally seen as one of the world’s safest financial assets – had suffered a dramatic sell-off. Wall Street chiefs and other experts also forecast a heightened likelihood of recession. Economists polled by Reuters on Thursday put US recession odds at 45%.After insisting for days that he would hold firm on his aggressive trade strategy, unveiled in full on 2 April, which he dubbed “liberation day”, Trump announced on 9 April that all countries that had not retaliated against US tariffs would receive a reprieve – and only face a blanket US tariff of 10% – until July.Powell on Wednesday said the US economy was well-positioned but added that Trump’s tariffs were likely to cause “at least a temporary rise in inflation. The inflationary effects could also be more persistent.”He indicated that the prospect of sweeping tariffs on virtually every trade partner could put the Fed in the unenviable position of having to choose between tackling inflation and unemployment.The World Trade Organization, meanwhile, warned that Trump’s tariffs would send international trade into reverse this year, depressing global economic growth.The International Monetary Fund (IMF) managing director, Kristalina Georgieva, said the global outlook was also weakening in the face of the Trump tariff onslaught, adding central banks like the Federal Reserve needed to remain agile and credible.“Resilience is being tested again – by the reboot of the global trading system,” she said.Trump also said as part of his Truth Social post at daybreak on Thursday that “Powell’s termination cannot come fast enough”. He dubbed him, further in the post, “Too Late” and put forward the argument that prices were coming down, from oil to eggs.Trump nominated Powell to become Fed chair during his first term in the White House, in 2018, and Joe Biden renominated him during his term in the White House, in 2022. The US Senate confirms the chair and the US president cannot terminate the head of the Federal Reserve before the end of their four-year fixed stints. Powell is in place until next spring.The US central bank has held interest rates steady at 4.25% to 4.5% since the start of this year.Trump said in his post: “The ECB is expected to cut interest rates for the 7th time, and yet, “Too Late” Jerome Powell of the Fed, who is always TOO LATE AND WRONG, yesterday issued a report which was another, and typical, complete “mess!” Oil prices are down, groceries (even eggs!) are down, and the USA is getting RICH ON TARIFFS. Too Late should have lowered Interest Rates, like the ECB, long ago, but he should certainly lower them now. Powell’s termination cannot come fast enough!”The New York Fed president, John Williams, spoke to Fox Business on TV on Thursday and backed up Powell’s wariness on rates.“I don’t see any need to change the setting of the Fed funds rate any time soon … It’s really about collecting information, understanding better what’s happening in the economy during the rest of this year, understanding kind of how the uncertainty plays out,” Williams said.Meanwhile, Politico, citing unnamed sources, reported after Trump’s post that the treasury secretary, Scott Bessent, had been cautioning White House officials against any attempt to fire Powell, for which there is no tested mechanism, saying it would risk destabilizing financial markets.And there was a fresh alarm bell sounded on the risk of stagflation, in which high inflation combines with high unemployment amid stagnant economic growth.“A sudden crystallization of the threat to Fed independence would both intensify market stress and shift it in more of a stagflationary direction with a sharp increase in tail risk,” Krishna Guha, vice-chair of an arm of the financial advisory firm Evercore ISI, said in a note.Reuters contributed reporting More
