Varney & Co. host Stuart Varney discusses President Donald Trumps public argument with Fed Chair Jerome Powell over building renovations.
President Donald Trump on Wednesday touted the latest gross domestic product (GDP) data that showed a rebound from the first quarter and also repeated his call for the Federal Reserve to cut interest rates ahead of the central bank’s announcement later today.
Trump wrote in a post on his Truth Social platform, “2Q GDP JUST OUT: 3%, WAY BETTER THAN EXPECTED! ‘Too Late’ MUST NOW LOWER THE RATE. No Inflation! Let people buy, and refinance, their homes!”
The president’s comments follow the Commerce Department’s release of the first estimate for second-quarter GDP, which showed the economy grew at a 3% annual pace in Q2 after it contracted by 0.5% in Q1. Economists surveyed by LSEG had expected a 2.4% increase for Q2.
The Q1 contraction was driven in part by a surge in imports, which are subtracted in GDP calculations to account for goods produced overseas, as firms looked to get inventory into the U.S. before more of Trump’s tariffs took effect. Imports slowed in Q2 and consumer spending rose, which the Bureau of Economic Analysis noted were the main drivers of the increase in real GDP despite being partly offset by decreases in exports and investment.
WILL POWELL AND THE FED CUT RATES IN RESPONSE TO TRUMP’S PRESSURE?
Trump’s post also called out Federal Reserve Chair Jerome Powell, who the president has referred to as “Mr. Too Late” in his long-running effort to pressure Powell and the Fed into cutting interest rates to boost the economy.
The Federal Open Market Committee (FOMC), the 12-member panel which collectively sets the Fed’s monetary policy, is set to announce its latest decision on interest rates later on Wednesday.
FEDERAL RESERVE INDEPENDENCE AT RISK FROM TRUMP’S PRESSURE CAMPAIGN, J.P. MORGAN WARNS
President Donald Trump has repeatedly criticized Fed Chair Jerome Powell and the Fed for not cutting interest rates. (Aaron Schwartz/CNP/Bloomberg via Getty Images / Getty Images)
The central bank is widely expected to hold rates steady at their current target range of 4.25% to 4.5%, where it has been since the FOMC’s last cut in December 2024.
Policymakers have signaled that they want to see the impact of tariffs on inflation data while also monitoring the labor market for signs of weakness – though one or two FOMC members have signaled they may favor rate cuts at this meeting and could dissent from the group’s decision.
TRUMP CALLS FED CHAIR POWELL A ‘KNUCKLEHEAD,’ SAYS INTEREST RATES SHOULD BE BELOW 1%
Federal Reserve Chairman Jerome Powell testifies before the Senate Committee on Banking, Housing, and Urban Affairs during a hearing to “examine the Semiannual Monetary Policy Report to the Congress” on Capitol Hill on June 25, 2025 in Washington, D. (Kent Nishimura/Getty Images / Getty Images)
Fed Governor Christopher Waller said that he believes the Fed should cut interest rates, dismissing concerns about tariffs fueling inflation and arguing they would cause a one-time price hike that policymakers should look past.
Additionally, Fed Governor Michelle Bowman has said she believes an interest rate cut may be needed at this meeting to prevent a further weakening of the labor market.
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The market sees the Fed as being more likely to cut interest rates in September, with the CME FedWatch tool showing a 59.8% probability of a 25 basis point rate cut as opposed to a 38.3% chance that the FOMC will continue to hold rates steady.
