The president’s frequent attacks against Jerome Powell have sparked concerns about the independence of the central bank.

United States President Donald Trump has again attacked Federal Reserve Chair Jerome Powell, stepping up criticism that has sparked concerns over efforts to undermine the independence of the country’s central bank.

In remarks before religious figures at the White House on Monday, Trump called Powell a “knucklehead” and insisted that he should lower interest rates.

“He’s a knucklehead. Stupid guy. He really is,” Trump said, insisting that inflation is not currently a serious concern for the economy and that interest rates should be brought down to one percent.

The US president’s frequent barbs and threats to replace Powell have previously spooked markets, wary of what some investors see as an effort to bring the central bank and the crafting of monetary policy under greater political control.

The central bank chief has thus far refused to budge on the question of interest rates, saying that it is still too early to bring them down given sources of potential disruption such as changing tariff policy.

Trump said over the weekend that he is planning to place important US trading partners such as the European Union and Mexico under a 30 percent tariff starting on August 1, and has warned other countries they could face similar rates or worse if they do not swiftly come to individual agreements with the US.

Kevin Hassett, an economic adviser to Trump, also stated over the weekend that the president might be able to fire Powell for cause, citing higher-than-expected expenses for the renovation of the bank’s headquarters.

The Fed has been in the process of renovating two buildings for its offices in Washington, DC for several years, with a current cost estimate of $2.5bn, about $700m more than originally anticipated.

Such cost overruns are far from atypical in Washington, but officials in the Trump administration have pounced on them as a potential door to firing Powell, whom Trump has long criticised.

Trump’s top budget adviser Russell Vought said last week that the White House is “extremely troubled” by the expense of the project, which critics saw as an effort to pile additional pressure on the central bank. Vought played an important role in the controversial conservative blueprint for a second Trump term known as Project 2025, which envisions a radical restructuring of government and consolidation of greater power in the executive branch.

A spokesperson for the US Inspector General, a nonpartisan government watchdog, says that Powell has requested a review of the cost overruns.

Source:

Al Jazeera and news agencies