U.S. President Donald Trump, who has previously criticized Federal Reserve Chairman Jerome Powell for failing to cut interest rates soon enough and even threatened to fire him, said Tuesday that he has no intention of firing Powell, although he remains unhappy with the Fed’s failure to cut rates more quickly.
“Absolutely not, never,” Trump replied in the Oval Office of the White House when asked to confirm that he was not seeking to remove Powell from his post.
“This is the media making this up. No, I have no intention of firing him. I just want him to be more aggressive on this rate cut thing.”
“Would it be the end of the world if he didn’t? No. But this is the right time. In short, I have no intention of firing him.”
Still, Trump reiterated his criticism of Powell.
“We think this is an excellent time to cut rates and hope that our chairman is acting ahead of schedule or on time and not behind the curve.”
Trump had been pressuring Powell to cut rates in the days prior. As recently as Monday, Trump also called Powell a ‘total loser’ and implied that previous Fed rate-cutting moves were designed to help former U.S. President Joe Biden.
Last week, Trump had said he couldn’t wait to see Powell ‘relieved of his duties’ and also insisted that Powell would walk if he tried to remove him. Kevin Hassett, director of the White House’s National Economic Council, had told reporters on Friday that Trump was looking into whether he had the authority to fire Powell, after the president repeatedly criticized the Fed on social media and in public speeches.
In addition, before the European Central Bank cut its benchmark interest rate by 0.25 percentage points to 2.25 percent last week, Trump had lashed out at Powell, repeatedly complaining that the Fed wasn’t cutting rates fast enough. Trump had called Powell a ‘total loser’ and had also said: ‘If I wanted him out of office, he’d be gone in a heartbeat’ and urged an immediate rate cut, a move that raised concerns about possible interference in the central bank’s independence.
Trump’s attitude shift calms market sentiment as U.S. stocks pull up after the bell
According to analysts, the statement is aimed at calming market tensions and marks a clear shift in Trump’s attitude. Previously, he kept increasing his criticism of Powell and once refused to rule out the possibility of taking unprecedented steps to dismiss him, causing market shock.
On Monday, as Trump continued to harshly criticize Powell and even threatened dismissal, U.S. stocks, U.S. bonds and the U.S. dollar fell together in a ‘three kills of stocks, foreign exchange and bonds’, and currencies such as gold and the safe-haven nature of the Swiss franc accelerated, with the price of gold hitting a new all-time high.
And after Trump’s statement on Tuesday that he has no intention of firing Powell, the S&P 500 ETF rose 1.2% after hours, and Apple rose more than 2.7%. Brent crude was down $1.02/barrel in 5 minutes at $66.74/barrel. USD/CHF was up 0.0069 in 5 minutes at 0.8198, while EUR/USD was down more than 1.0% on the day at 1.1365.
U.S. Treasuries and the U.S. dollar showed more stability on Tuesday as the White House signaled progress in trade talks to push for a reduction in the sweeping tariffs announced earlier this month. While the 10-year Treasury yield was little volatile, the 2-year yield rose to 3.82% on weak auction demand.
According to a 90-year-old U.S. Supreme Court precedent, the president does not have the power to fire Powell unless he can prove gross negligence or misconduct on the part of federal officials. Powell has repeatedly said the president doesn’t have the power to remove him from office and that he won’t leave before the end of his term, which ends in 2026.
The White House also defended Trump’s comments criticizing Powell earlier on Tuesday, saying the president ‘has the right to express his displeasure’ with the Fed. Powell’s analysis that tariffs could cause economic growth to stagnate and push up inflation, which would limit the Fed’s room for further rate cuts, angered Trump.
