Navarro Calls for Federal Reserve Board to Vote Down Powell on Rates Ahead of July Meeting

At the White House, Trump adviser Peter Navarro has publicly urged the Federal Reserve Board to consider overriding Chairman Jerome Powell and lower interest rates during their upcoming July 29-30 meeting. Navarro's statement, reported by Jennifer Jacobs, intensifies political pressure on the independent central bank, arguing that current economic data supports a rate cut. He emphasized that

"if Jay Powell continues down this path of refusing to lower rates when the data says it should that the rest of the board of governors should just simply vote to do what should be done, which is the lower rates."

Navarro, a vocal critic of Chairman Powell, contended that Powell "doesn't understand Trumpomics" and that his policies are holding rates "artificially high." In an opinion piece for The Hill published July 7, 2025, Navarro asserted that Powell's "stubborn refusal to lower interest rates" despite "ample data" marks his third major policy blunder. He suggested that maintaining high rates has significant economic costs, potentially leading to a loss of approximately 750,000 jobs and hundreds of billions in tax revenues, as reported by Forbes Breaking News.

The Federal Reserve operates as a board with voting members, not solely under the Chairman's unilateral decision, a point often highlighted in discussions about the Fed's independence. While a rare and highly unusual move, the Board of Governors does possess the power to vote on interest rate decisions. This structural aspect is central to Navarro's call for an override, aiming to bypass Powell's current stance.

Navarro's push comes amidst ongoing economic discussions, including rising inflation expectations. A University of Michigan survey in April 2025 indicated that consumer sentiment had plummeted, with respondents expecting inflation to surge to 6.7 percent in the year ahead, as reported by The New York Times. Federal Reserve officials have publicly stressed the importance of keeping inflation expectations anchored, with some indicating a higher bar for interest rate cuts.

The Peterson Institute for International Economics, in a September 2024 working paper, analyzed the potential economic implications of eroding the Fed's political independence. Their modeling suggests that such interference could lead to lower U.S. real GDP and significantly higher inflation, along with capital outflows. Historically, former President Trump has also publicly criticized Powell and the Fed's monetary policy, including past threats to remove him, though Powell has maintained the president lacks the lawful authority to do so.

Despite his strong views on interest rates, Navarro clarified to Jacobs that he "hasn't been weighing in on the White House search for a new Fed chair." His focus remains squarely on the current Board's actions regarding the federal funds rate, particularly in the lead-up to their late July meeting. The outcome of this internal dynamic within the Federal Reserve will be closely watched by markets and policymakers alike.