As the old saying goes "A Picture is worth a thousand words." This picture is worth at least 10,000.

First things first, let’s get the elephant out of the room. President Trump is a master troll. He knows what he is doing here. He’s a Showman and clearly understands the optics of having Fed Chairman, Jerome Powell standing next to him looking uncomfortable and anxious. This conflict did not start when Trump took office this past January. These two have history. Both men have had a confrontational working relationship since 2018. Let’s delve into it.

2018 (Strike 1)

In 2018, then-President Trump hired Powell to lead the Federal Reserve and replace Janet Yellen. Not everyone is aware that Jerome Powell was a Trump hire. At the time, Trump viewed Powell as a well-thought market-friendly nomination who would balance Fed policy with Trump’s pro-business mantra. That rosy feeling wouldn’t last very long as Powell embarked on a series of interest rate hikes. Powell engaged in four 25 point hikes within a year of taking the Chairman position. (March, June, September, and December of 2018)

Of course rate hikes are a necessary evil sometimes. It is how you keep inflation in check. So why did Trump flip out about these hikes back in 2018? Because the average inflation rate for 2018 was a mere 1.8%. His thinking at that time was, the economy is on a roll and inflation is low. Why thwart the momentum of the economy with rate hikes? At no point in 2018 did the inflation rate go above 2.5%. By this time, insults would be hurled at Powell by the President. Powell backs off with the hikes. Roughly, a year later, we had a worldwide pandemic and rate hikes were an afterthought.

Fall 2024 (Strike 2)

In the fall of 2024, Powell started the easing process and cut rates 3 times starting in September and reducing rates from 5.5% to 4.5% by December.

Here is the kicker and why some were upset with Powell about these cuts. The inflation rate back in September 2024, when Powell made that jumbo 50 basis point rate cut in September, is the same as it is today and that’s with an economy currently dealing with tariffs. There is a view that the 50 bps cut along with the 25 bps cut in early November was done to boost the stock market and help the Democrats win the presidential election. The cuts did boost the stock market. They boosted the market so much that it re-ignited another round of inflation. These expansionary monetary policy moves were considered politically biased by many.

2025 (Strike 3)

Currently the economy is humming along. After a spring scare in financial markets about how tariffs would impact the economy and Americans as a whole, fears about Tariffs have subsided. Inflation is remaining steady at 2.7% after economists and Ph.D’s were predicting CPI (Consumer Price Index) numbers would reach above 5% by the summer. Powell has held on to the thought that inflation due to tariffs will eventually find its way into the economy. However, trade deals are being done. As more deals get done and time goes on, the threat of tariffs causing this rapid inflation is becoming less likely.

So what was Strike 3? International Expansionary Monetary Policy. This is just a fancy way of saying these countries are cutting interest rates. Other countries who have higher inflation rates than the United States are cutting rates. This is what is truly irking President Trump. With regards to these trade deals, clearly the U.S. has the upper hand. However, our counterparts have lower borrowing costs than us. The U.S. has approximately $9 Trillion in gov’t debt that needs to be refinanced. A 25 bps reduction on $9 Trillion dollars would save the U.S Gov’t a massive amount of money. A quarter point cut would lessen the burden of mortgage rates, auto loans and other consumer debt for for the American people. This is the main frustration with Powell, not only by Trump but also by Wall Street and Main Street.

Here is a list of countries outside of U.S that have implemented interest rate cuts YTD in 2025.

My Thoughts

So after giving these 3 scenarios, I am convinced that this past Thursday’s meeting between Trump and Powell was not about renovations to the Federal Reserve Board building. Although, personally I think a $2.5B renovation is ridiculous. This meet-up was about July 30th. Wednesday, July 30th is the next Fed Board meeting when the Board determines whether to cut rates or leave rates unchanged. Trump met with Powell to apply pressure. During the awkward renovation cost exchange between them, President Trump did not waste the opportunity to tell the media in front of Powell that a cut on Wednesday is needed. Yes. This is a bullying tactic. However it might work. What you are seeing is Economists revising their high inflation levels to more reasonable levels. You’re also seeing anti-trumpers say enough is enough and rates need to be cut. There are even people in the Board who are starting to publicly dissent from Powell. That is a big deal because The Fed always likes to deliver a unified message to the media/public.

So again, Thursday was not about doing the due diligence on a building renovation. It was to reinforce a message of what needs to be done on Wednesday. Will it work? It depends. Is the cover picture above between these two very stubborn men worth a 1,000 or 10,000 words? We will find out shortly.