Trump says he has “no intention” of firing Powell

President Trump said on Tuesday that he has no plan to remove Federal Reserve Chairman Jerome Powell. He also hinted towards lowering tariffs on China, resulting in relief for investors worried by the President’s aggressive moves earlier. 

“I would like to see him be a little more active in terms of his idea to lower interest rates…but, no, I have no intention to fire him,” Trump told reporters in the Oval Office.

The remarks somewhat steadied nervous global investors and nudged U.S. stock futures and the dollar higher while pulling gold back from record peaks.

The softer tone arrived less than a week after Trump tweeted that “Powell’s termination cannot come fast enough!”

On Tuesday, Trump downplayed outside speculation that the White House was actively studying a dismissal plan. He shrugged off earlier comments by National Economic Council Director Kevin Hassett, who had said lawyers were looking into whether a president could fire a Fed chair. “This is a perfect time to lower interest rates,” Trump said. “If he doesn’t, is it the end? No. It’s not.”

Behind the scenes, senior advisers cautioned the president that firing Powell would likely spark a market slide and an extended court battle, according to sources familiar with the discussions. Treasury Secretary Scott Bessent was among those who warned of fallout, the people said, though the Treasury Department declined to comment.

Under the Federal Reserve Act, governors — including the chair — may be removed only “for cause,” a standard courts have generally limited to serious misconduct or failure to perform basic duties. Powell has told associates he does not think the president can legally remove him and would contest any attempt to do so.

Even so, Trump’s public attacks have been frequent. Last week, he told reporters, “If I want him out, he’ll be out of there real fast, believe me,” and on Monday, he renewed his criticism online. 

Those comments have pumped fresh volatility into markets already unsettled by the trade dispute with Beijing.

Trump may reduce tariffs on Chinese goods

In Tuesday’s Oval Office exchange, Trump also addressed tariffs, calling the existing 145 percent rate on Chinese goods “very high.” He added, “It won’t be that high. It will come down substantially. But it won’t be zero. It used to be zero.”

Analysts said any suggestion of softer trade terms and a steady hand at the Fed was enough to halt the previous day’s sell-off. U.S. equity futures rose in pre-market trading, the greenback firmed, and bullion prices retreated from their all-time highs.

Still, economists cautioned that firing Powell would probably raise borrowing costs for households, companies, and the government if investors doubted the Fed’s freedom to set rates. 

“He got the hint. Firing Jay would be a catastrophic own goal,” said Mark Spindel, an investment manager who co-authored a history of Fed independence. He added that turning the Fed into a political captive carries “any number of bad outcomes, none of which helps the president or the country.”

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