Trump Was Ahead on Rate Cuts, But Powell’s Patience Proved Justified—Here’s Why (2025 Update)

Trump’s Early Warning vs. Powell’s Data-Driven Approach

Back in April 2025, former President TRUMP took to Truth Social, urging Fed Chair Jerome Powell to cut rates immediately. He argued the labor market was weaker than reported and that high rates would stifle growth. Critics dismissed it as political noise—until this week’s revisions wiped 300,000 jobs from the past four months of payroll data. Turns out, Trump’s instincts were spot-on. Powell, however, relied on flawed figures that painted a rosier picture. “The numbers I used to hold rates steady were simply wrong,” Powell admitted in a press briefing. But was his patience a mistake—or a calculated move?

The Jobs Report That Changed Everything

Friday’s August jobs report was a bombshell: just 22,000 jobs added (vs. 75,000 expected), unemployment ticking up to 4.3%, and downward revisions for June (-13,000 jobs) and July. Suddenly, Powell’s Jackson Hole speech—where he hinted at “shifting risk balances”—made eerie sense. Analysts at UBS and EY now see a September rate cut as 99% certain. “The question isn’t ‘if,’ but ‘how much,’” Leslie Falconio of UBS told Yahoo Finance. Even Fed Governor Chris Waller, a longtime hawk, endorsed a 25-basis-point cut, warning: “We’re not behind yet, but we can’t wait for disaster.”

White House Pressure vs. Fed Independence

Labor Secretary Lori Chavez-DeRemer didn’t mince words: “If Powell doesn’t cut rates now, Americans will keep suffering.” She slammed the Fed for “political maneuvering” and highlighted how businesses need cheaper capital to hire. Meanwhile, Trump doubled down, dubbing Powell “Too-Late Jerome” on social media. But inside the Fed, voices like St. Louis Fed President Alberto Musalem pushed back, noting the “equilibrium” job growth needed to sustain the population has dropped to 30,000–80,000 monthly—far below the old 100,000+ benchmark. Translation: The goalposts have moved.

What’s Next for Rates? Analysts Weigh In

Capital Economics’ Bradley Saunders predicts a modest 25-basis-point cut this month, ruling out a 50-point move: “The unemployment rate’s limited rise to 4.3% tempers panic.” But the bigger debate centers on 2026. With immigration down and job openings shrinking, the Fed’s playbook is outdated. As one BTCC market strategist joked, “Powell’s playing chess while Trump’s yelling from the bleachers.” Still, the data—flawed or not—now demands action. The only question: Will September’s cut be enough to reboot confidence?

FAQs: The Fed’s Rate Cut Dilemma

Why did Trump criticize Powell’s rate policy?

Trump argued since April 2025 that delayed cuts WOULD harm the economy, a view later supported by revised jobs data showing 300,000 fewer jobs than initially reported.

What triggered the Fed’s sudden shift?

The weak August jobs report (22,000 jobs vs. 75,000 expected) and consecutive downward revisions forced the Fed to acknowledge deteriorating labor conditions.

How likely is a September rate cut?

Markets price a 99% chance, with most analysts expecting 25 basis points. Fed officials like Waller have openly supported easing.