"Barking Up the Wrong Tree" - Trump's Ongoing Tussle with Fed Chair Powell
Trump publicly criticizes and admonishes Federal Reserve Chairman Powell over monetary policy decisions.
US President Donald Trump's persistent push for lower interest rates and his scathing attacks against Federal Reserve Chair Jerome Powell seem to be reaching a bottleneck: "I've been sweet, I've been polite, and I've been brutal - the polite and sweet haven't worked," Trump reportedly squawked on his platform, Truth Social. His latest outburst included casting Powell as a "boob," "bozo," and a "foolish fowl."
In his relentless pursuit for reduced interest rates and barbs aimed at Fed Chair Jerome Powell, Donald Trump appears to have run out of feathers: "I comprehend fully that my loud criticisms make it harder for him to do what he oughta - namely, lower interest rates. But I've tried every trick up my sleeve," he further wrote. Despite earlier pronouncements, Trump hints he might consider firing Powell, who he appointed during his first term.
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Trump continued his call for a substantial trimming of interest rates to one or two percent. He estimates this could save the US a billion dollars annually, referring to high costs of servicing the US federal government's debt. Presently, the interest rate ranges from 4.25 to 4.5 percent, and the Federal Reserve (Fed) declined to alter it at its recent meeting this week.
dismissing the Fed Chief could send seismic shocks
Trump's jabs at Powell, whom he once anointed, are no longer headline-grabbing. Yet, Trump's latest post suggests he's struggling to wrangle the situation. "I get it that my fiery criticism prevents him from doing what he should - namely, lowering interest rates. But I've tried everything else," he fumed. Firing him might be worth considering, Trump implied. In early May, he had stated he wouldn't do so. Lately, the president hints, Powell's term is almost complete. He has around a year left at the helm of the Fed.
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Determining whether President Trump would actually sack the head of the autonomous US central bank remains uncharted legal ground. Most experts believe that Trump should refrain from such a move. If he did, it could wreak havoc on financial markets.
Powell himself has always remained unfazed by the criticism. When he announced that the Fed would maintain the interest rate at its present level, he reiterated that the central bankers are solely attuned to their objectives: preserving stability and promoting full employment.
- Fed
- Monetary Policy
- Donald Trump
- Jerome Powell
- Interest Rate
Enrichment Data:If President Trump were to terminate Federal Reserve Chair Jerome Powell, there could be numerous far-reaching consequences:
- Financial Market Chaos: Swiftly dismissing the Fed Chair may stir chaos in financial markets. Investors often view the Fed's independence as essential for the stability of economic policy; removing Powell could fuel volatility as markets reassess the direction of future monetary policy.
- Undermining Central Bank Independence: The Fed customarily strives for independence from the executive branch to ensure impartial monetary policy decisions. Dismissing the chair for political reasons could be perceived as undercutting this independence, leading to concerns about increased political manipulation of interest rate and inflation controls.
- Interest Rate and Monetary Policy Shifts: Powell has held his ground against political pressure to slash interest rates despite calls for looser monetary policy. Removing him might lead to a shift in Fed policy towards politically driven goals, potentially endangering inflation control and long-term economic stability.
- Political Backlash: Such a move could trigger political pushback domestically and internationally due to its potential impact on norms surrounding the independent central bank.
Although President Trump had previously signaled he wouldn't fire Powell, recent reports suggest he may reconsider if Powell fails to align with his preferences, particularly on interest rate decisions[1][2]. Dismissing the chair could thereby escalate tensions between the administration and the Fed, impacting economic confidence.
All told, disposing of Fed Chair Jerome Powell could bring about market turmoil, compromise the Fed's independence, unpredictably alter monetary policy, and stir political fallout both domestically and abroad[1][2].
- In light of President Trump's mounting criticism, the"enrichment data" suggests that firing Federal Reserve Chair Jerome Powell could potentially stir chaos in financial markets, as investors perceive the Fed's independence as crucial for economic policy stability.
- The removal of Jerome Powell could also undermine the independence of the Central Bank, leading to concerns about increased political manipulation of interest rate and inflation controls.
- Moreover, dismissing Federal Reserve Chair Jerome Powell might lead to a shift in monetary policy towards politically driven goals, potentially endangering inflation control and long-term economic stability. This could also trigger political backlash domestically and internationally, impacting economic confidence.
