Donald Trump tells Jay Powell to cut rates as data raises concern for US economy

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Donald Trump has called on Jay Powell, the Federal Reserve chair, to cut US interest rates, as new data showed weak private sector hiring and a contraction in the services sector, raising fears of an economic slowdown.

Trump launched his attack on the US central bank in a Truth Social post on Wednesday, where he compared it with the European Central Bank, which has been lowering interest rates this year while the Fed has kept them steady.

“ADP NUMBER OUT!!! “Too Late” Powell must now LOWER THE RATE. He is unbelievable!!! Europe has lowered NINE TIMES!” Trump wrote, referring to the private sector payroll numbers provided by Automatic Data Processing, a US company.

The figures showed an increase of just 37,000 jobs in May, the lowest monthly gain since March 2023. Shortly afterwards, the ISM’s index of activity in the services sector showed an unexpected if slight contraction, adding to concerns about the US economic outlook.

“Respondents continued to report difficulty in forecasting and planning due to longer-term tariff uncertainty and frequently cited efforts to delay or minimise ordering until impacts become clearer,” said Steve Miller, chair of the ISM’s services business survey committee.

So far, the US economy has shown signs of resilience in the face of Trump’s aggressively protectionist trade policies and efforts to slash government programmes and gut some federal agencies.

But the weak figures on private hiring and the services sector could reignite concerns that the world’s largest economy is set for a slowdown in the months ahead.

The soft data on Wednesday raises the stakes for Friday’s monthly jobs figures — and what they will tell markets about the health of the US economy.

Economists surveyed by Bloomberg expect a slowdown in job creation to 130,000 positions in May, compared with 177,000 in April. The unemployment rate in May is expected to remain at 4.2 per cent.

Last week, Trump met Powell at the White House and warned him that the Fed chair was making a “mistake” by not lowering the central bank’s main interest rate from its current range of 4.25 per cent to 4.5 per cent.

According to the Fed, Powell told Trump that monetary policy would be dictated by economic data alone and its decisions would be “based solely on careful, objective and non-political analysis”.

Trump has frequently and publicly criticised the Fed, both in this first and second presidential terms, raising concerns that the president is undermining the independence of the US central bank.

But Trump has recently backed away from previous suggestions that he would try to remove Powell from his post before his term ends in May 2026.