Washington (AFP) – US President Donald Trump said Tuesday he had no plans to fire the Federal Reserve chief, in apparently conciliatory remarks after berating him and triggering market turmoil. Wall Street investors dumped US assets on Monday, with all three main indexes down after Trump took a series of swipes at Jerome Powell, head of the US central bank. The president had criticized Powell for warning that the White House’s sweeping tariffs policy would likely reignite inflation.
“I have no intention of firing him,” Trump said Tuesday. “I would like to see him be a little more active in terms of his idea to lower interest rates — it’s a perfect time to lower interest rates. If he doesn’t, is it the end? No.” Trump’s recent outbursts against Powell had fanned concern that he would oust him, and White House economic advisor Kevin Hassett said last week the president was looking at whether he could do so. Trump has repeatedly said he wants rate cuts now to help stimulate economic growth as he rolls out his tariff plans, and had threatened to fire Powell if he does not comply. “If I want him out, he’ll be out of there real fast, believe me,” Trump said Thursday.
– Inflation fears – Powell has said he has no plans to step down early, adding that he considers the bank’s independence over monetary policy to be a “matter of law.” Many economists agree that the administration’s tariff plans — which include a 10 percent “baseline” rate on imports from most countries — will put upward pressure on prices and cool economic growth.
Asked about the possibility that the US executive branch tries to fire Powell before the end of his term, European Central Bank chief Christine Lagarde told CNBC on Tuesday she hoped this was “not on the table.” The president does not have direct authority to fire Federal Reserve governors, but Trump could initiate a lengthy process to attempt to unseat Powell by proving there was cause to do so.
Powell had earlier warned that Trump’s sweeping tariffs could put the Fed in an unenviable position of having to choose between tackling inflation and unemployment. Closing before Trump’s remarks, Wall Street stocks rebounded Tuesday after US officials were upbeat about trade talks with China. All three major US indexes rose following White House Press Secretary Karoline Leavitt’s comments that Trump was “setting the stage for a deal with China.” Briefing.com analyst Patrick O’Hare put part of the rebound down to sentiment that Trump would not fire Powell, and instead was “simply setting him up now to take the blame in the event of an economic downturn.”
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