The tension between the White House and the Federal Reserve has escalated once again. White House National Economic Council Director Kevin Hassett took the rare step on Thursday of publicly targeting former Fed Chair Jerome Powell, harshly criticizing his continued presence on the Fed’s Board of Governors as “highly unusual” and bluntly stating that it is crowding out a seat for a Trump administration appointee. These remarks mark a new phase in pressure from senior White House officials on the Fed’s independence, directly linking personnel appointments to monetary policy disputes.
In an interview with Bloomberg Television, Hassett expressed strong dissatisfaction with Powell’s continued tenure. “It’s extremely anomalous that Jay Powell is still there,” Hassett said. “A former chair staying on the board is very, very unusual.” Hassett’s comments were not spontaneous. A day earlier, he had already sent strong signals during an appearance on Fox Business, where he claimed that a majority within the Fed were voting “not necessarily out of patriotism, but because they want to get Trump.” When pressed on whether specific Fed members concerned him, Hassett directly pointed to Powell’s decision to remain.
The root of this storm lies in the Fed’s monetary policy direction running counter to the White House’s expectations. Despite U.S. President Donald Trump repeatedly and publicly demanding steep rate cuts, Fed policymakers decided to hold the benchmark interest rate steady at their meeting last month. This confrontational decision has left the White House deeply frustrated.
The current composition of the Fed Board is the focus of Hassett’s pressure. Since the start of Trump’s second term, he has successfully appointed only one governor to the Fed: new Chair Kevin Warsh. In contrast, Powell’s term as a Fed governor runs until January 2028, and he has previously made clear he has no intention of leaving in the near term. In April, Powell explained publicly that he would leave “when I think it’s appropriate,” citing concerns that an investigation into the Fed’s headquarters construction project was politically motivated. That statement was seen at the time as a veiled resistance to White House interference.
In the interview, Hassett made no effort to hide his suspicion of Powell’s motives. “I worry about what his motivations are,” Hassett stated bluntly. He even suggested on Wednesday that “we have to keep a close eye on this,” implying the White House would not sit idly by regarding Powell’s next moves. By Thursday, however, Hassett’s tone appeared to soften slightly, adding: “At the end of the day, this is something that Warsh is going to have to resolve.” When asked whether a formal investigation into Powell was necessary, Hassett did not answer directly, instead adopting a relatively restrained approach: “The Fed needs to do its job, they have great leadership, and we hope everything works out fine.”
Beyond the personnel attacks, Hassett continued to pressure the Fed on the direction of monetary policy. Market reports indicate that on Wednesday, Hassett explicitly warned that hiking interest rates to combat rising prices would be a mistake. He argued that the U.S. economy is experiencing a “supply-driven boom” and noted that raising rates in this context “is purely a macroeconomic policy error.” Hassett even revealed that new Chair Warsh himself does not want to tighten policy but must contend with a decision-making committee that is not unified in its views. “Rest assured, if something goes wrong, it won’t be Kevin Warsh’s fault,” Hassett said. “He has to coordinate all these different opinions inside the Fed, and that is an incredibly difficult job.”
Hassett’s remarks reveal a unique logic within the White House regarding inflation management. He does not believe strong employment data should be a reason for the Fed to hike rates, instead emphasizing that the surge in AI-driven productivity has a deflationary effect sufficient to offset price pressures. This series of statements indicates that while Trump has hinted he would grant Warsh greater policy autonomy, the White House maintains a hardline and specific stance on how the Fed should set policy.
In the same week that Hassett was speaking out forcefully, Fed Chair Warsh was attending a central bank conference in Portugal. In stark contrast to the White House’s aggressive posture, Warsh remained tight-lipped in public about the interest rate outlook. He acknowledged only that inflation is still too high, but also noted that inflation expectations and inflation risks have both declined in recent weeks, reiterating the Fed’s commitment to bringing inflation down to its 2% target. This silence, set against the White House’s vocal demands, creates immense tension, foreshadowing even more intense wrangling both within the Fed and between the Fed and the White House ahead of the next policy meeting in late July.