On a recent Tuesday, President Donald Trump clarified his position regarding Federal Reserve Chair Jerome Powell, stating that he had “no intention” of dismissing Powell. This declaration put to rest days of uncertainty concerning the central bank’s autonomy, which had unsettled the financial markets.
Speaking from the Oval Office, Trump expressed his view that “this is a perfect time to lower interest rates” but confirmed he did not plan to remove Powell from his position. Over the past week, the President had utilized his social media platform to criticize Powell for not reducing interest rates rapidly, even musing at one point about Powell’s eventual departure.
These comments came amidst a backdrop of market turbulence, as investors were already apprehensive about the economic consequences of President Trump’s broad tariffs. The Federal Reserve has been cautious about lowering interest rates, partially due to the potential impact of tariffs, which could increase the cost of imported goods. Nevertheless, Trump has portrayed tariffs as beneficial for the United States, claiming they aid American workers and boost domestic manufacturing.
“We are taking in a lot of money from tariffs,” Trump remarked on Tuesday.
The relationship between President Trump and Jerome Powell has been characterized as challenging, despite Powell’s nomination to the role by Trump during his first presidential term. The President has frequently expressed dissatisfaction with the central bank for not maintaining lower interest rates and has demonstrated a desire for influence over monetary policy.
However, the Federal Reserve is structured to operate independently from political pressure to make necessary, albeit sometimes unpopular, decisions to combat inflation. Despite efforts to avoid provoking the President, Powell remains committed to serving the remainder of his term, which concludes in May of the following year. Powell maintains that the President lacks the authority to fire him without “cause,” a stance supported by existing Supreme Court rulings.
Nonetheless, the White House has shown an interest in challenging this norm by removing board members from other independent agencies, leading to concerns that Trump might attempt to dismiss Powell.
