US President Donald Trump is frustrated with Federal Reserve Chairman Jerome Powell’s resistance to cutting interest rates, and the impact could ripple through the entire financial and crypto markets.
Since returning to the office in January 2025, President Trump has repeatedly called on the Fed to slash interest rates, arguing that:
But Fed Chair Jerome Powell isn’t budging. The central bank has taken a “wait-before-act” stance despite mounting political pressure.
The current federal interest rate stands at 4.25%-4.50%, and no cuts have been made since December 2024.
Why the delay?
The Fed argues that rate cuts right now could overheat the economy and fuel inflation, risking long-term instability.
President Trump cannot directly fire the Fed Chair, whose term ends in May 2026, but he’s already publicly demanded Powell’s resignation.
Kevin Warsh, a former Fed governor and known policy dove, is rumored to be Trump’s preferred replacement for someone more aligned with his views on rate cuts.
A change in leadership could reshape Fed policy, possibly triggering major financial shifts.
Trump’s push for lower interest rates could turn bullish for crypto. Here’s why:
However, the power struggle between Trump and the Fed may also lead to short-term volatility and investor uncertainty.
Trump’s aggressive push for rate cuts and potential reshaping of the Federal Reserve could create the perfect setup for a crypto rally, but not without turbulence.If Powell stays firm, rate cuts may come slowly. But if Trump replaces him with someone more dovish, expect faster policy shifts and possibly a surge in crypto investor confidence.
Cutting rates now risks reigniting inflation, as the May 2025 annual rate rose to 2.4% and the labor market remains strong (jobless claims dropped). The Fed fears overheating the economy and jeopardizing long-term stability.
Cutting rates too soon or aggressively could lead to a resurgence of inflation, erode savers’ returns, encourage excessive risk-taking in markets (like real estate), and potentially weaken the national currency, making imports more expensive.
Interest rate cuts generally benefit crypto prices by increasing market liquidity, making borrowing cheaper, and prompting investors to move capital into “risk-on” assets like Bitcoin and altcoins, which offer potentially higher returns than bonds.
The U.S. Fed is holding rates steady (4.25%-4.50%), while central banks like the ECB and Bank of Canada have been cutting theirs. Trump views this divergence as a disadvantage, arguing it makes U.S. exports less competitive and complicates his trade goals.
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