President Donald Trump has publicly denied any plans to dismiss US Federal Reserve Chair Jerome Powell, following media speculation that suggested such an action could be imminent.
These reports, which indicated that the president was contemplating Powell’s termination, led to a noticeable drop in stock prices and the dollar, alongside a rise in Treasury yields.
On Wednesday, Trump stated, “I don’t rule out anything, but I think it’s highly unlikely unless he has to leave for fraud,” a remark seemingly connected to ongoing criticism regarding cost overruns in the $2.5 billion renovation of the Federal Reserve’s historic headquarters in Washington, DC.
His comments appeared to stabilize the markets, as stocks and Treasury yields rebounded following his affirmation.
However, Trump did not shy away from criticizing Powell, labeling him as a “terrible” chair for not agreeing to lower interest rates more aggressively.
Reports revealed that Trump had floated the idea of firing Powell in a recent meeting with Republican lawmakers, showing them a draft letter with intentions to terminate him.
According to sources from outlets like The New York Times and Bloomberg News, Trump engaged lawmakers in a discussion about whether to proceed with firing Powell.
Although Trump acknowledged that these discussions took place, he firmly denied the existence of a firing letter.
In response to inquiries concerning the president’s intentions toward Powell, a Federal Reserve official pointed to Powell’s own statements indicating his commitment to serve out his term until May 15, 2026.
The situation has sparked a heated conversation about the Federal Reserve’s independence, with Republican Senator Thom Tillis voicing strong support for maintaining its autonomy.
On the Senate floor, Tillis emphasized the potential consequences of subjecting the Fed to direct presidential control, describing such a move as a significant mistake.
He warned, “The consequences of firing a Fed chair, just because political people don’t agree with that economic decision, will be to undermine the credibility of the United States going forward,” adding that immediate repercussions could follow if such a decision were made.
Powell has been under pressure since his appointment by Trump in late 2017 and subsequent reappointment by President Joe Biden in 2021.
Despite the pressures, Powell has maintained that interest rate decisions will be driven by economic data, while the Fed remains in a wait-and-see mode regarding the effects of Trump’s tariff policies on the economy.
Industry experts believe that maintaining an independent Federal Reserve is crucial for the stability of the US economy.
Bharat Ramamurti, a senior adviser for economic strategy at the American Economic Liberties Project, pointed out that Trump’s political challenges are evident in his dissatisfaction with Powell.
He noted that Trump’s economic policies have created an environment that makes it difficult for the Fed to reduce interest rates, contrary to Trump’s promises to lower costs for the American populace.
Adding to the existing tensions, the White House renewed its criticism of the Fed’s operations when Russell Vought, the director of the Office of Management and Budget, expressed in a letter that Trump was “extremely troubled” by the renovation costs at the Federal Reserve.
This ongoing confrontation between the White House and the Federal Reserve Chair reflects a complicated dynamic in which economic policymaking and political considerations often intersect.
image source from：aljazeera
