Trump said he does not intend to fire Powell after he has attacked the Federal Reserve Chair for not lowering interest rates.
Andrew Harnik/Getty Images North America
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Andrew Harnik/Getty Images North America
President Trump said Tuesday he had “no intention” of firing Federal Reserve Chair Jerome Powell, ending days of speculation about the independence of the central bank that had roiled the financial markets.
“I have no intention of firing him,” Trump said from the Oval Office, though he maintained, “this is a perfect time to lower interest rates.”
Since last week, Trump has used his social media platform to criticize Powell for, in his view, not lowering interest rates quickly enough — and at one point mused Powell’s “termination cannot come fast enough.”
The attacks had roiled markets at a time when investors were already on edge about the economic impact of Trump’s sweeping tariffs.
The Fed has been cautious about lowering rates, in part because of the impact of the tariffs, which would make imported goods more expensive.
However, Trump has framed tariffs against U.S. trading partners as a win for the country — and good for American workers and the domestic manufacturing sector.
“We are taking in a lot of money from tariffs,” Trump said in his remarks Tuesday.
A difficult relationship
President Trump and Powell have had a difficult relationship even though Trump nominated the current Fed chair for that post during his first term in the White House.
Trump has frequently criticized the central bank for not keeping interest rates lower, and also expressed a wish to have a say on monetary policy.
However, the Fed is designed to operate independently of that kind of political pressure so that it can make the unpopular decisions necessary to fight inflation.
Powell has tried to avoid antagonizing the president, but he’s also been adamant that he intends to serve out the remainder of his term, which runs through May of next year.
Powell insists the president does not have the authority to fire him, except for “cause,” meaning some kind of bad behavior. Current Supreme Court precedent supports that view.
But the White House has signaled a willingness to test that standard, firing board members of other independent agencies, raising concerns that Trump would try to fire Powell.