President Trump ramped up his battle with the Federal Reserve on January 13, 2026, demanding Chair Jerome Powell slash interest rates again. This time he’s not mincing words. Trump wants rates “nearly rock bottom” at 1% and took personal shots at Powell, dubbing him “Too Late Powell” and even calling him a “jerk.” Talk about workplace friction.
Trump’s Fed feud escalates as he demands rock-bottom rates and publicly ridicules Powell with personal insults.
The demands follow December’s consumer price index data showing inflation at 2.7% year-over-year, with core inflation at 2.6%. Still above the Fed’s 2% target. But Trump doesn’t see it that way. He boasted on Truth Social about “Great (LOW!) Inflation numbers for the USA,” using the data to justify his call for dramatic cuts. The market currently shows a 97.2% probability of unchanged rates in upcoming Fed meetings.
Powell and the Fed haven’t exactly been sitting on their hands. They’ve already brought rates down from 4.5% to 3.75% through fall 2025. But that’s nowhere near Trump’s desired 1% – a level not seen since the pandemic panic in March 2020. Powell has consistently emphasized the importance of setting monetary policy free from political intimidation.
The Fed’s independence is clearly under siege. Days before Trump’s latest demands, federal prosecutors mysteriously launched an investigation into Powell and the central bank. Coincidence? Please. Trump even threatened legal action against multiple Federal Open Market Committee members. This kind of pressure on a legally independent institution is unprecedented.
Wall Street analysts are raising red flags. Forced rate cuts could weaken the dollar and trigger steeper yield curves. Mark Zandi of Moody’s Analytics suggests rates could reasonably go to 3%, but Trump’s 1% target seems extreme.
The administration is hitting the financial system from all angles – the Fed, credit card industry, and housing market are all in the crosshairs. Congressional leaders are worried this could damage future administrations’ ability to make sound monetary decisions.
The last time rates dropped this dramatically was during a global pandemic. But Trump isn’t waiting for a crisis – he’s trying to manufacture one at the Fed. And Powell, for now, is standing his ground.
