Trump Says He Has ‘No Intention’ of Firing Fed Chair Powell, Reassures Markets

President Donald Trump clarified on Tuesday that he has "no intention" of firing Federal Reserve Chair Jerome Powell before his term expires next year, easing concerns among investors who had been rattled by recent rhetoric.

Political Background

Trump appointed Powell as Fed chair during his first term. Powell is scheduled to serve until May 2026. However, tensions have risen in recent weeks over Powell’s handling of interest rates. The president has consistently pushed for the Fed to lower rates, claiming it would boost economic activity. On Monday, Trump even called Powell a "major loser," criticizing his stance on rates.

Legal Considerations

Despite Trump’s criticisms, Powell has firmly stated that the law prevents the president from removing him. Under the Federal Reserve Act, the chair can only be removed for cause, not at the president’s discretion.

Shift in Tone

Trump’s latest comments mark a departure from earlier statements where he did not rule out firing Powell. The president now says the media "runs away with things" and reiterated, “No, I have no intention of firing him.” He expressed a desire for more action from Powell, particularly regarding rate cuts, calling it a “perfect time” to lower interest rates.

Market Reactions

Trump’s statement came after a volatile period in the markets, where stocks experienced significant declines amid concerns over the potential dismissal of Powell. However, his comments appear to have provided a sense of stability, with major stock indexes rebounding following the announcement.

Potential Risks

Despite Trump's reassurance, some critics have warned that removing the Fed chair would be a drastic move that could destabilize financial markets. The Federal Reserve has traditionally operated with a degree of independence from political influence, and any perceived threat to that independence could lead to panic among investors.

Conclusion

While Trump’s recent remarks have caused uncertainty in the markets, his latest comments indicate a more measured approach. However, his ongoing criticism of Powell and the Federal Reserve’s policies highlights the continuing tension between the president and the U.S. central bank. As Powell’s term continues, the situation remains fluid, with further developments likely to shape both U.S. economic policy and market sentiment.