Federal Reserve Chairman Jerome Powell has been frequently criticized by President Trump, earning the new nickname "Too Late." This is not just a war of words, but also revives the long-standing market perception of the Fed being "half a beat slow." With the new round of tariff policies and mixed economic signals, whether Powell's wait-and-see strategy is correct has become a focal point of market attention.
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ToggleTrump Unleashes Full Force: Is Powell a "Clueless Idiot"?
Right after the Federal Reserve decided to maintain interest rates unchanged, Trump immediately attacked on Truth Social, calling Powell an "idiot" and tagging him with "Too Late Jerome Powell". He believes current inflation is "almost non-existent" and the Fed should have cut rates earlier.
Notably, the core PCE index preferred by the Fed in March showed zero growth, giving some credibility to Trump's statement. However, his new tariff measures have only been in place for about a month, and the economic impact has not yet fully emerged, so a hasty rate cut could be premature.
History Repeating? Fed Chairs Always "Half a Beat Late"
From Arthur Burns facing stagflation in the 1970s without daring to raise rates, to Alan Greenspan's slow response to the dot-com bubble, and Ben Bernanke's underestimation of the subprime crisis, criticism of the Fed being "too slow" has never ceased.
"Whether raising or cutting rates, the Fed is always a step behind," said Dan North, senior economist for North America at Allianz Trade. "They want to wait for clear data before acting, but by then the economy is usually already in recession."
Policy Dilemma: Is Inaction the Safest Choice?
Nevertheless, North also points out that in the current uncertain environment, Powell keeping rates unchanged might be the "most correct mistake".
On one hand, Trump's trade policies may trigger inflation, while on the other hand, overall economic activity has not shown clear signs of slowing down. Under these two-way risks, "taking no action" seems to be the most conservative and rational choice.
Market Signals Confused: Economic Performance Stable, But Confidence Weakening
According to the latest data, the overall US economy has not shown obvious signs of recession, with manufacturing and service sector activities still resilient. However, market sentiment has already developed cracks: nearly 90% of S&P 500 companies mentioned tariff risks in earnings calls, and consumer confidence index has shown signs of decline.
Powell expressed confidence at the press conference, believing that the current job market performance still meets the "maximum employment" target and describing the economy as overall "stable".
Not Cutting Rates in Advance, Missing a Good Opportunity? Market Experts Divided
Market experts are divided on not cutting rates in advance. Krishna Guha, global policy head at Evercore ISI, noted that one of Powell's reasons is that "waiting does no harm", but this wait-and-see approach might come at a cost. He added that Powell also said: "We don't know what the right thing to do is", which is more in line with the current situation.
Joseph LaVorgna, who served as an economic advisor in the Trump administration, is also skeptical. He believes that if the Fed waits until the job market deteriorates before cutting rates, "it will be too late".
According to Wall Street wisdom, "the job market is the last sector to know about a recession". If the Fed uses this as a basis for decision-making, it may once again be "behind the curve".
Is Powell's Silence Correct Amid Trump's Criticism?
Powell's current approach may have its rational reasoning, but market and political pressures are gradually intensifying. Historically, it has never been easy for the Federal Reserve to balance between "stability" and "foresight". If it is truly "too late" as Trump suggests, this label may not be exclusive to Powell, but rather a reflection of the long-standing institutional culture of the Federal Reserve.
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