Trump's harsher remarks: the next chairman of the Federal Reserve cannot suppress the market economy without reason, and must take the initiative to cut interest rates

US President Trump sent a more clear signal about the candidate for the Federal Reserve chairman and monetary policy. If the economy and market perform well, he hopes that the new chairman of the Federal Reserve will push for interest rate cuts rather than “unprovoked suppression of the market” due to concerns about inflation.

Trump said on social media on Tuesday: “If the market is doing well, I hope the new chairman of the Federal Reserve can lower interest rates and not destroy the market for no reason. Anyone who disagrees with this cannot become the chairman of the Federal Reserve.” He criticized a kind of “anomaly” that has developed in recent years. Instead, favorable economic data has caused the market to fall. The reason is that investors are worried that the Federal Reserve will quickly raise interest rates due to potential inflation.

However, market performance on Tuesday did not confirm this concern. According to data from the US Bureau of Economic Analysis, the real gross domestic product (GDP) grew at an annual rate of 4.3% in the third quarter. Boosted by this, the S&P 500 index rose for the fourth consecutive trading day and reached a record high. Trump's latest statement comes at a time when he is seeking to lower borrowing costs by changing the Federal Reserve's leadership. The political pressure facing the White House is also rising, and voters' attention to living costs such as housing continues to increase.

Trump revealed last week that the candidates to replace current Chairman Powell have been reduced to “three to four people,” and the results may be announced “within the next few weeks.” He named White House National Economic Council Director Kevin Hassett and former Federal Reserve Governor Kevin Walsh as one of the main contenders, while also interviewing and publicly praising Federal Reserve Governor Christopher Waller. “I think every one of them would be a good choice,” Trump said.

The Fed cut the benchmark interest rate by 25 basis points to 3.5% — 3.75% earlier this month. This is the third consecutive meeting to cut interest rates, but the Federal Open Market Committee (FOMC) is still divided on whether to continue to cut interest rates in the future. Three officials voted against the resolution, the most since 2019. Powell said bluntly after the meeting that cutting interest rates this time was a “difficult choice.” Trump has repeatedly called for a sharp reduction in interest rates to about 1%, or even lower.

Hassett, a potential chairman candidate, also publicly expressed his dissatisfaction with the Federal Reserve. In an interview on Tuesday, he said that although the US economy achieved growth far exceeding expectations in the third quarter, the Federal Reserve is still slow to cut interest rates. He said, “If you look at central banks around the world, the US clearly lags behind the situation in cutting interest rates.”

Hassett believes that the AI boom is driving economic growth while putting downward pressure on inflation. He also pointed out that of the 4.3% GDP growth rate in the third quarter, about 1.5 percentage points came from Trump's tariff policy's contribution to narrowing the trade deficit.

However, Hassett's close relationship with Trump has also raised concerns among some market participants about the independence of the Federal Reserve. In response, Hassett emphasized that the independence of the Federal Reserve is “very important.” Trump, on the other hand, once again emphasized in a nationally televised address last week that he will choose “someone who believes in drastic interest rate cuts” as the next chairman of the Federal Reserve. The speech focused on “affordability,” but according to the latest polls, Trump's approval rating on economic issues is only 37%.

Regarding the decline in Trump's approval rating, Hassett said that public perception often does not fully reflect the economic data itself. “This is largely related to news reports and how people understand and perceive the outside world.”