President Donald Trump stepped up his attacks on Federal Reserve Chairman Jerome Powell on Thursday, calling him a "dumbass" and demanding a big rate cut to ease the $600 billion annual interest burden on the U.S. debt. Now, with inflation cooling faster than expected, Citi economists believe the Federal Reserve could start cutting rates as early as September.

"We continue to expect the Fed to cut rates by 125 basis points starting in September," Citi economists wrote, pointing to the rapid slowdown in core inflation as a key catalyst for policy easing.

Trump's latest attack came after two inflation reports released this week showed lower-than-expected consumer and producer inflation data. The president said, “Lowering interest rates by 2 percentage points would save the United States $600 billion a year, but we can’t get this guy [Powell] to do it.” He added, “We’re going to spend $600 billion a year, $600 billion, just because a fool sitting here [says] ‘I don’t see a good reason to cut rates right now.’” Trump also said he would support higher rates if inflation rose, but insisted, “Inflation has fallen, and I may have to force something.”

Adding credibility to calls for an earlier rate cut is the view of Citi economists, who point out that the core CPI rose just 0.13% month-over-month in May — below Citi’s forecast and the market consensus.

“The slowdown in underlying inflation dynamics should give Fed officials more confidence that tariff-induced price increases will not create persistent inflationary pressures,” especially if the labor market continues to ease, the economists said.

While tariffs are expected to put some upward pressure later this summer, Citi sees limited pass-through to consumer prices due to weak demand. They added: "There is little evidence that tariffs pushed up consumer prices in May," with service prices also remaining subdued and housing inflation continuing to slow.

Economists' inflation forecasts show core PCE at just 2.6% year-on-year in May, with further moderation expected as house prices fall and new rents remain soft. They warned that monthly inflation data will be closely watched for any signs of tariff impact, but the trend remains downward for now.

With inflation cooling faster and markets betting on a resumption of the rate-cutting cycle in September, Trump may not have to wait long to see the monetary policy easing he has so loudly demanded.