Jamie Dimon doubles down on backing Powell despite Trump criticism, saying an independent Fed means lower rates

This week the Federal Open Market Committee (FOMC), led by Powell, confirmed expectations that they would not be reducing the base rate from its current level of 4.25% to 4.5%.

Despite the fact the president has called Powell “hard headed” and “dumb” for maintaining such levels, Dimon publicly backed the Fed chief.

He also suggested that political intervention into the Fed—which is how some spectators have viewed Trump’s rhetoric—would actually work against Trump’s wishes for a reduction.

Speaking to CNBC yesterday, Dimon said: “I have never seen a president ever say they want higher interest rates … so I’m not going to agree with all that language, but I think Jay Powell is a professional. I think independence is important. I think actually independence keeps interest rates lower, if you actually look through the history of interest rates a little bit.

“Just lowering short-term rates doesn’t necessarily have the effect you want on 10-year rates and we should be a little cautious. The president gets a chance to pick a new Fed chair in like eight months from now.

“I think they’re kind of doing the right thing. The economy’s been chugging along. We have been in that soft landing now for four or five years. Inflation still hasn’t hit 2%, it’s 2.5 or 2.7, however you look at it. And I think if inflation comes down and the economy continues to do well, they will probably reduce rates shortly.”

In May the Wall Street veteran said: “There’s always a notion that somehow the Fed is omnipotent and can do whatever it wants. And they do set short-term rates, but they also have to follow the facts. So they raise rates because inflation went up, and they can’t control it even today.”

The market consensus is indeed that Powell will cut later this year. Many believe that rate cut will come at the FOMC’s next meeting in September, following the Jackson Hole Symposium in August which has historically been a time used to discuss big policy changes.

That being said, Powell struck a far more hawkish tone in his post-meeting press conference this week, surprising analysts with the suggestion that if the Fed wasn’t “looking through” tariff inflation—which critics have claimed he is not—a raise of the base rate could have been on the cards.

Dimon would also ‘wait and see’

The general tone of Powell’s messaging this year has been to “wait and see.” This cautious attitude earned Powell the nickname of “Too Late” from Trump.

Dimon’s comments come after the ‘White Knight of Wall Street’ reportedly met with the president last week to discuss the economy.

Relations between the two began warming after Trump shared a clip of a clip of Dimon’s interview with Fox News on his social media account, Truth Social, earlier this year. The post not only showed the president had watched the interview, but also appreciated the backing from the CEO of America’s largest bank.

But on Fed policy, Dimon is on the side of Powell, saying: “When you look at it … there are a lot of forces at work in the economy, and tariffs are one of them. The remilitarization of the world, the fiscal deficits, the demographics, all those things are going to drive various things. And, yes, they may drive slightly higher inflation.

“What you really want is more growth. That is far more important than whether inflation ticks up or down a little bit.”

With President Trump in the last 24 hours announcing a new swathe of tariffs on countries which haven’t yet agreed deals—Brazil will be facing a 50% hike, Canada 35% for example—the sands are still shifting beneath the feet of the Fed.

Dimon added that while the effect of tariffs so far has been “quite moderated” there may yet be “some effect” from cost increases being handed back to consumers. He explained: “It’s also quite clear some is being passed on and some is not. And we just don’t know yet. And you may see more effect down the road. We will have to wait and see.”