Trump Says He Won’t Fire Fed Chair Powell \ Newslooks \ Washington DC \ Mary Sidiqi \ Evening Edition \ President Donald Trump said he has no plans to fire Federal Reserve Chair Jerome Powell despite recent criticisms and a social media outburst that rattled financial markets. Trump maintains the Fed should lower interest rates, arguing inflation is no longer a threat. Powell’s term ends in 2026, and Trump has vowed to keep pressuring the central bank on policy.
Quick Looks
- Trump says he has no plans to fire Fed Chair Jerome Powell.
- Last week, Trump hinted at firing Powell, sparking market concerns.
- The Fed has paused interest rate cuts at 4.33%, drawing criticism from Trump.
- Trump claims inflation is “virtually nonexistent” and rates should be lowered.
- Powell warned that Trump’s tariffs may increase inflation and slow growth.
- The Fed maintains its independence from political influence under its dual mandate.
- Trump’s latest remarks attempt to reassure markets without walking back criticism.
- Powell’s term as Fed chair is set to expire in May 2026.
Deep Look
President Donald Trump’s clarification this week that he has “no intention” of firing Federal Reserve Chair Jerome Powell offered temporary relief to financial markets and policy watchers—but it did little to ease concerns about mounting political pressure on the nation’s central bank.
The moment came after a volatile week in which Trump’s Truth Social post threatening Powell’s removal sent ripples through Wall Street, prompted condemnation from economists, and reignited a perennial debate over the independence of the Federal Reserve—a pillar of American monetary policy for over a century.
From Tension to Tapering: A Presidential Pivot
At a press briefing on Tuesday, Trump stated clearly:
“I have no intention of firing him.”
But that remark came on the heels of a much more provocative claim just days earlier:
“If I want him out, he’ll be out of there real fast, believe me.”
The contradiction has left many wondering whether Trump’s shift was a calculated attempt to reassure nervous investors, or a sign of internal disagreement within the administration on how to handle Powell’s cautious approach to interest rates.
Either way, the mixed messaging has fueled broader fears that the Federal Reserve’s apolitical stance could be at risk, especially as Trump ramps up efforts to portray Powell’s caution on rate cuts as an obstacle to economic expansion.
A History of Conflict and Control
Trump’s rocky relationship with Powell is not new. Though he appointed Powell to lead the Fed in 2018, the president has frequently clashed with the chair—often publicly—over interest rate policy, inflation, and economic growth strategy.
In 2019, Trump famously referred to Powell as an “enemy” on par with China, pressuring the Fed to adopt looser monetary policy. He has continued to question Powell’s leadership, particularly as inflation rates have fluctuated and global economic uncertainty has risen due to war, tariffs, and lingering post-pandemic shocks.
The most recent conflict stems from Powell’s reluctance to cut interest rates further, despite a slowdown in inflation. Trump insists inflation is now under control and that lower rates are necessary to stimulate growth ahead of the 2024 election.
The Case for Fed Independence
The Federal Reserve was designed to operate independently of the executive branch to protect monetary policy from short-term political considerations. Its dual mandate is to maximize employment and stabilize prices, and its decisions are meant to be guided by economic indicators—not the Oval Office.
That principle is what makes Trump’s comments so controversial.
Publicly threatening to fire the Fed Chair, even hypothetically, raises red flags about institutional overreach and potential damage to investor confidence. Any perception that the Fed is being politicized could lead to rising interest rates, a weakening U.S. dollar, or even capital flight, as investors look for stable, apolitical environments elsewhere.
“The markets need to believe the Fed will do what’s necessary—not what’s politically popular,” said a former Fed economist.
The Inflation Argument: Who’s Right?
At the heart of this standoff lies a key disagreement: Is inflation still a concern?
Trump says no. He claims that falling energy and grocery prices are signs that inflation has subsided and that the Fed is being unnecessarily cautious.
“It’s all coming down,” Trump said. “There is virtually no inflation.”
Powell, however, sees a more nuanced picture. While headline inflation has cooled, core inflation—particularly in services—remains sticky. Moreover, Powell has warned that Trump’s aggressive tariff policies could drive inflation higher again, particularly if supply chains become disrupted or import prices surge.
At a speech in Chicago last week, Powell was blunt:
“The level of tariff increases announced so far is significantly larger than anticipated… [They] will include higher inflation and slower growth.”
Market Fallout and Fed Credibility
Trump’s original post about Powell’s possible firing immediately led to a stock market selloff, underscoring the sensitivity of markets to the perception of Fed independence. Investors fear that if monetary policy is seen as politically manipulated, the long-term credibility of the Fed could be undermined.
While Tuesday’s statement brought short-term reassurance, many analysts believe the damage has already been done.
“Even the hint that a sitting president might fire the Fed chair for political reasons creates instability,” said an analyst at Goldman Sachs. “This isn’t just about Powell—it’s about the next chair, and the one after that.”
Looking Ahead: Policy, Politics, and Powell
With Powell’s term set to expire in May 2026, the future of the Fed may hinge on the outcome of the 2024 election. If Trump wins reelection, he could install a Fed chair more aligned with his views, potentially reshaping the central bank’s priorities for years to come.
For now, Powell continues to navigate a delicate balance: managing the threat of renewed inflation, responding to slowing growth, and maintaining confidence in the Fed’s independence—all while fielding criticism from the most powerful office in the country.
Whether this week’s cooling rhetoric marks a true de-escalation, or merely a temporary truce, remains to be seen.
Key Takeaways:
- Trump walked back threats to fire Powell, but tension remains.
- The Fed’s pause on rate cuts is a flashpoint for Trump’s economic messaging.
- Powell’s criticism of tariffs highlights a deeper philosophical divide.
- Investors are nervous about political influence on Fed policy.
- The Fed’s independence is once again in the political crosshairs ahead of 2024.
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