Fed’s Powell Gets Support From Global Central Bankers as Trump Steps Up Pressure

Jerome Powell, chairman of the Federal Reserve. (Al Drago/Bloomberg)

President Donald Trump has escalated his attacks on Federal Reserve Chair Jerome Powell in recent weeks, accusing the central bank of costing the U.S. trillions of dollars and signaling that a replacement is already in the works.

However, Powell got a rare show of support Tuesday from his global peers—who made clear they back his cautious approach to monetary policy.

“I speak for myself, but I speak for all of my colleagues on the panel,” said European Central Bank President Christine Lagarde during a policy discussion during the ECB’s Forum on Central Banking in Sintra, Portugal. “I think we would do exactly the same thing as our colleague Jay Powell does.” The audience broke into applause.

Powell appeared alongside Lagarde, Bank of England Gov. Andrew Bailey, Bank of Japan Gov. Kazuo Ueda, and Bank of Korea President Chang Yong Rhee. The gathering is often described as Europe’s equivalent of the Fed’s Jackson Hole conference and comes at a precarious moment for the U.S. central bank.

Speaking the day after Trump renewed his criticism of the Fed, Powell warned that the Fed’s ability to cut rates is being complicated by the president’s own trade policies.

“In effect, we went on hold when we saw the size of the tariffs and essentially all inflation forecasts for the United States went up materially as a consequence of the tariffs,” Powell said.

The Fed’s policymaking committee held rates steady at 4.25%-4.50% during its June meeting, but officials remain divided on what comes next. Eight policymakers expect two rate cuts by year-end, while seven expect none, according to the central bank’s most recent Summary of Economic Projections.

Two Trump-appointed Fed officials, Gov. Christopher Waller and Vice Chair for Supervision Michelle Bowman, have called for rate cuts as soon as July, citing softer inflation and early signs of weakness in the job market. Powell and others have urged patience, pointing to tariff-driven price pressures, geopolitical uncertainty, and policy risks.

Powell was asked during Tuesday’s forum whether July is too soon to consider easing rates. He avoided a direct answer, but signaled a cautious, data-dependent approach.

“We are going meeting by meeting,” Powell said. “I wouldn’t take any meeting off the table or put it directly on the table. It’s going to depend on how the data evolve.”

The central bank is also expected to complete its long-running framework review by the end of the summer, with further changes to how the Fed communicates its views and decisions likely in the fall, Powell said.

Trump’s latest remarks have added to the political friction surrounding the Fed and heightened speculation about Powell’s future. Treasury Secretary Scott Bessent told Bloomberg this week that the White House may fill a coming Fed board seat with someone positioned to take over when Powell’s term as chair expires next May. Trump made clear in a Fox News interview last weekend that Powell’s successor will be expected to cut rates aggressively.

Trump has repeatedly accused Powell and the Fed board of keeping rates too high and hurting the economy, saying on Monday that they “should be ashamed of themselves.” In a press conference from Florida on Tuesday, Trump posited that Powell must be suffering from “Trump derangement syndrome,” using a term to describe negative reactions to the president’s policy as foolish.

“Anybody would be better than Jay Powell,” said Trump.

Treasury yields, which had been falling, climbed Tuesday after Powell’s comments on tariffs. The dollar, meanwhile, extended its recent slide: the greenback has suffered its biggest decline for the first half of any year since 1973 as Trump has ramped up his attacks on the central bank.

With 10 months left in his term, Powell declined to say whether he plans to stay on as a Fed governor after his tenure as chair ends. But he stressed that his priority is to leave the economy on stable footing.

“All I want and all anybody at the Fed wants is to deliver an economy that has price stability, maximum employment, financial stability,” Powell said. “What keeps me awake at night is how do we get that done? I want to hand over to my successor an economy in good shape.”

The next key moment for the Fed will come Thursday with the release of June’s jobs report. Economists expect payroll growth to slow and the unemployment rate to edge higher—which could signal that labor market cooling is under way. A strong report could give the Fed more cover to keep rates steady, while a weaker result may fuel calls for earlier cuts from both inside the Fed and the White House.

Write to Nicole Goodkind at nicole.goodkind@barrons.com.