Trump fumes as European Central Bank lowers interest rates

The central bank on Thursday announced cutting its key interest rates for the seventh time in a row. The cut, a quarter of a percentage point, comes as the 20 countries using the euro seek continued economic growth despite tariffs recently announced by the United States, their largest export market. After European officials threatened retaliatory tariffs, the Trump administration paused the tariffs for 90 days pending negotiations.

Low interest rates can spur economic growth, though some economists say they also can cause inflation to rise. The European Central Bank said inflation of the euro has been settling right around its target rate of 2%.

How about the United States? The European Central Bank’s announcement came one day after the leader of the central U.S. bank hinted at staying his present course. Tariffs will probably cause at least a temporary rise in inflation, Federal Reserve Chairman Jerome Powell said Wednesday in a speech at the Economic Club of Chicago that touched on monetary policy. The effects of the inflation could linger after the increase, and the Fed is in a good position to wait for more clarity before changing its policy, he said. The U.S. federal interest rates have remained the same since late 2024, following a series of three reductions.

What does the White House want? President Donald Trump criticized Powell’s speech in light of the news from Europe, saying that Powell was late to lower interest rates and wrong about inflation. Food and oil prices are down, the president said. 

Trump also said Powell’s termination could not come soon enough. His term as Fed chairman runs through May 2026, and Powell hassaid the president has no legal basis to remove him from office. The Supreme Court in the 1935 case Humphrey's Executor v. United States protected commissioners from being fired at will. But it will soon hear another case that some analysts say could allow it to overturn that precedent.