Larry Kudlow: Powell’s Tight Money Policy Is Hurting the Economy — Time to Step Down?

On a recent episode of Kudlow on FOX Business, host Larry Kudlow didn't hold back when analyzing the Federal Reserve’s latest moves — and Fed Chair Jerome Powell's role in what he believes is unnecessary economic damage.

The full segment can be viewed on YouTube here:

“Is Jay Powell forcing America into a recession?” Kudlow asked bluntly, opening his commentary with a warning that Powell’s continued commitment to high interest rates may be pushing the U.S. economy to the brink.

Kudlow highlighted troubling signs in the labor market, citing the dismal July jobs report and downward revisions from previous months.

According to Kudlow, private sector job growth has slowed to an average of just 52,000 over the past three months — far below the 125,000+ typically needed to maintain economic momentum. The small business household survey was even worse, showing a net loss of 288,000 jobs over the same period.

Although he acknowledged some bright spots — like wage growth outpacing inflation and strong business investment thanks to full expensing provisions — Kudlow argued these gains are being undermined by Powell’s refusal to pivot.

“Monetary policy is too restrictive,” Kudlow said, echoing the recent dissent by Fed Governor Christopher Waller, who argued that current policy is about 1.5 percentage points too high given current inflation and employment conditions.

Kudlow also noted that Fed Governor Adriana Kugler announced her resignation, effective August 8 — opening the door for President Trump to appoint a replacement, potentially reshaping Fed leadership altogether. 

He even mentioned the possibility that another governor, Michael Barr, may also step down, giving Trump even more influence over the central bank's future.

Kudlow didn’t mince words about what he believes should happen next:

“Powell should step down immediately. Let President Trump put his own people in place in order to save the economy.”

He criticized Powell’s “obsession with tariffs” and urged the Fed to start cutting interest rates immediately — not wait until the next meeting. According to Kudlow, the Fed should have already moved with rate cuts in May, June, and July. Delaying further, he warned, risks even more harm to housing, auto sales, credit markets, and everyday Americans.

Bottom Line

Larry Kudlow is calling for a full course correction at the Federal Reserve — and a leadership change to go with it. With signs of economic slowdown mounting and political pressure growing, all eyes are now on whether the Fed will act — or continue on what Kudlow sees as a destructive path.