Trump And JD Vance Push Fed To Slash Interest Rates After Mild Inflation Report, Calling Current Policy 'Monetary Malpractice'

Benzinga
2025.06.12 08:46
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President Trump and Vice President JD Vance are urging the Federal Reserve to cut interest rates by one percentage point following a mild inflation report showing a 0.1% monthly increase in consumer prices. Vance criticized the Fed's hesitation as 'monetary malpractice,' while Trump emphasized the need for lower rates to reduce debt interest costs. The latest CPI data indicated a 2.4% annual increase, slightly above expectations, amid mixed opinions on the Fed's strategy. Economists are divided on whether to cut rates immediately or adopt a wait-and-see approach.

President Donald Trump and Vice President JD Vance intensified pressure on Federal Reserve Chairman Jerome Powell to cut interest rates by a full percentage point Wednesday, following the release of cooler-than-expected May inflation data that showed consumer prices rising just 0.1% monthly.

What Happened: Vance labeled the Fed’s reluctance to cut rates as “monetary malpractice” in a post on X, echoing Trump’s aggressive stance. “The president has been saying this for a while, but it’s even more clear: the refusal by the Fed to cut rates is monetary malpractice,” Vance wrote.

Trump simultaneously posted on Truth Social: “CPI JUST OUT. GREAT NUMBERS! FED SHOULD LOWER ONE FULL POINT. WOULD PAY MUCH LESS INTEREST ON DEBT COMING DUE. SO IMPORTANT!!!”

The Bureau of Labor Statistics reported May CPI increased 2.4% annually, up from April’s 2.3% but below economists’ expectations. Core CPI, excluding volatile food and energy prices, rose 2.8% year-over-year, also below the forecasted 2.9%.

The latest employment data showed 139,000 jobs added in May, exceeding the 130,000 consensus estimate but representing slower growth than April’s revised 147,000 gain.

Why It Matters: Fed officials face mounting pressure as tariff-driven inflation concerns clash with cooling labor markets. Chicago Fed President Austan Goolsbee warned that Trump’s fluctuating trade policies create stagflation risks – the “central bank’s worst situation” for monetary policy decisions.

Economists remain divided on Fed strategy, with some advocating immediate July cuts while others support the “wait and see” approach until tariff impacts fully materialize. CME Group’s FedWatch tool shows 99.9% probability of unchanged rates at the June meeting, though September cut odds exceed 60%.

  • Scott Bessent Signals Willingness To Extend Tariff Pause For ‘Good Faith’ Negotiations, Trump Thinks Not A ‘Necessity’

Photo courtesy: Joshua Sukoff / Shutterstock.com

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