Trump's 'Numbskull' Insult Comes Back To Bite—In Record Time

President Donald Trump has never been one to hold back, but his latest jab at Federal Reserve Chair Jerome Powell might be aging worse than milk left out in the sun. Less than a day after calling Powell a "numbskull" for refusing to slash interest rates, the financial landscape has shifted dramatically—putting Trump's demand in an awkward position.

At a White House event on Thursday, Trump unleashed a tirade against Powell, frustrated that the Fed hadn't cut rates despite inflation remaining near a four-year low. For months, Trump has been pushing aggressively for lower rates, arguing that cutting them by two percentage points could save the government $600 billion a year in financing costs.

Vice President JD Vance also turned up the heat on Powell, calling the central bank's refusal to cut rates "monetary malpractice" in a June 12 post on X.

Read More: Trump And JD Vance Push Fed To Slash Interest Rates After Mild Inflation Report, Calling Current Policy ‘Monetary Malpractice’

But Powell, ever cautious, has refused to budge as the rate of consumer-price increases is still above the central bank’s 2% target. Trump has dismissed those concerns outright, insisting that inflation was under control and that the Fed could simply hike rates again later if needed.

Renewed Inflation Risk Suggests Powell’s Caution Is Justified

Well, the fear of higher inflation may have resurfaced faster than Trump anticipated. Within hours of his remarks, global crude prices surged as much as 14%, following Israel's large-scale airstrikes on Iran's nuclear infrastructure, reigniting fears of an inflationary shock. The sudden spike in crude prices threatens to ripple through the economy, pushing up costs for businesses and consumers alike—precisely the kind of scenario Powell had warned about when resisting Trump's aggressive push for rate cuts.

Peter Schiff, a well-known economist and financial commentator, weighed in on the situation in an X post on Thursday, highlighting the inflationary risks ahead.

"Since the May low, the oil price is up 30%," Schiff wrote. "Anyone hoping for lower inflation or Fed rate cuts based on falling oil prices needs to rethink their assumptions. Both oil prices and inflation will be higher under Trump than they were under Biden. Rate cuts will just fuel both fires."

Will Trump Blink Or Double Down?

Schiff's warning underscores the dilemma now facing Trump. His argument for slashing rates hinged on the idea that inflation was under control—but with oil prices surging, the Fed's cautious approach looks increasingly justified. The geopolitical turmoil in the Middle East has thrown a wrench into Trump's economic playbook, making his "numbskull" insult to Powell seem premature at best.

In March 2022, Powell testified before the U.S. Senate Banking Committee that every $10 per barrel increase in crude oil prices raises U.S. headline inflation (CPI) by approximately 0.2 percentage points and sets back economic growth by 0.1 percentage points—a warning that feels increasingly relevant amid the latest oil price surge.

In a September 2021 study, the Federal Reserve Bank of Dallas examined the inflationary effects of rising oil prices. The research found that if crude prices climbed to $100 per barrel for three months, the annual inflation rate could increase by up to 3 percentage points in the short term.

As markets brace for further volatility, the question now is whether Trump will adjust his stance—or double down on his demand for rate cuts, even as inflation risks mount.

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Image created using photos from Shutterstock and Fed.