Trump Reverses Plan to Dismiss Fed Chair Powell, Advocates Rate Cuts

WASHINGTON: President Donald Trump has retracted his earlier threats to dismiss Federal Reserve Chair Jerome Powell, stating he has no intention of removing him and instead calling for the central bank to reduce interest rates to bolster the economy.

On Monday, Wall Street investors offloaded American assets, resulting in declines across all major indexes following Trump’s critical remarks towards Powell, the head of the U.S. central bank.

The president had chastised Powell for his caution about how the administration’s extensive tariffs could trigger a resurgence in inflation.

“I have no plans to fire him,” Trump asserted on Tuesday.

“I would appreciate it if he were more proactive about lowering interest rates – it would be an ideal time to do so.

“If he chooses not to, will it be catastrophic? No.”

Trump’s recent comments raised fears of a potential ousting of Powell, and White House economic advisor Kevin Hassett mentioned last week that the president was assessing his options.

The president has consistently advocated for interest rate cuts to stimulate economic growth while implementing his tariff strategy and suggested he might remove Powell if he doesn’t comply.

“If I want him gone, he’ll be out of there quickly, believe me,” Trump remarked on Thursday.

Concerns About Inflation

Powell has indicated he has no intention of resigning ahead of schedule, maintaining that the Fed’s independence regarding monetary policy is a “legal matter.”

Many economists concur that the administration’s tariff initiatives, which include a 10 percent base rate on imports from most nations, will likely create upward pressure on prices while hampering economic growth.

When asked about the possibility of the executive branch attempting to remove Powell before the end of his term, European Central Bank President Christine Lagarde expressed her hope that this scenario was “not under consideration.”

While the president lacks the direct authority to fire Federal Reserve governors, Trump could embark on a lengthy process aimed at unseating Powell if he can demonstrate just cause.

Previously, Powell warned that the extensive tariffs could place the Fed in a challenging position between combating inflation and maintaining low unemployment.

As Wall Street stocks closed before Trump’s remarks, they rebounded on Tuesday, buoyed by positive updates concerning trade negotiations with China.

All three major U.S. indexes saw gains following comments from White House Press Secretary Karoline Leavitt, who stated that Trump was “laying the groundwork for a deal with China.”

Patrick O’Hare, a Briefing.com analyst, attributed part of the market rebound to the sentiment that Trump would not fire Powell and was instead “positioning him to take the blame in case of an economic downturn.”