President Donald Trump reassured on Tuesday that he has no intention of dismissing Federal Reserve Chair Jerome Powell. This statement comes after Trump’s prior comment about possibly wanting to dismiss Powell contributed to a dip in the stock market.
During a conversation with reporters, Trump clarified his position, stating, “I have no intention of firing him.” This comes after the president hinted that he might remove Powell from his position due to dissatisfaction with the Fed’s decision to pause cuts to short-term interest rates. Powell has pointed out that the tariffs introduced by Trump have instigated concerns regarding slower economic growth and elevated inflation pressures. In contrast, Trump contends that inflationary concerns are overstated.
The president argued that with declining energy and grocery prices, the Federal Reserve should reduce its benchmark rates, asserting that inflation is no longer a significant threat to the U.S. economy. Such remarks suggest that Trump plans to continue exerting influence on the central bank, which aims to operate free from political pressure to stabilize prices and maximize employment.
Showing signs of frustration, Trump took to social media the previous Thursday, expressing his displeasure by stating, “Powell’s termination cannot come fast enough!” Despite continuing grievances, Trump communicated on Tuesday that Powell would remain in his position until his term concludes in May 2026.
Expressing his viewpoint, Trump commented, “It’s all coming down… The only thing that hasn’t come down… are interest rates. And we think the Fed should lower the rate. We’d like to see our chairman be early or on time, as opposed to late. Late’s not good.” Trump reiterated his stance on Monday via his Truth Social account, insisting that “there is virtually No Inflation.”
This claim builds on Trump’s previous assertion last week that he believed he had the authority to remove Powell, causing concerns among investors wary of potential political influence over monetary policy.
In the Oval Office, Trump remarked last Thursday, “If I want him out, he’ll be out of there real fast, believe me,” expressing dissatisfaction with Powell’s actions. Meanwhile, the Fed has refrained from making further reductions in the federal funds rate, which plays a crucial role in influencing the monetary supply by setting the overnight interest rates between banks.
The federal rate has decreased by a full percentage point, now effectively at 4.33%, following perceived signs of easing inflation. Initially, the Fed had increased the rate during President Joe Biden’s tenure due to inflationary spikes, linked to global economic recovery from the COVID-19 pandemic and rising energy and food prices following Russia’s invasion of Ukraine in 2022.
Nevertheless, Powell has openly challenged the president’s trade policies, warning that Trump’s tariff strategies could adversely affect the U.S. economy. Addressing this issue at the Economic Club of Chicago, Powell cautioned, “The level of tariff increases announced so far is significantly larger than anticipated, and the same is likely to be true of the economic effects which will include higher inflation and slower growth.”