US President Donald Trump attacked on Thursday the chairman of the US Federal Reserve Jerome Powell for not lowering interest rates and said that he could release him if he wanted to renew the threat from the first term, which could cause a serious legal clash in terms of long -term political independence of the Central Bank.
“If I want him, it will be quickly from there, believe me,” said Trump in an oval office, asking questions from reporters during a visit with the Italian Prime Minister Giorgia Meloni. “I'm not happy with him.”
Trump's comments appeared Publishing on your website social media in which the republican president called Powell to lower the short -term Fed interest rate and said: “Powell's ending cannot come quickly enough!”
The term Powell as a chair ends in May 2026.
Powell was Initially nominated by Trump in 2017 and was appointed Another four -year term In 2021, by the then President Joe Biden.
At the November press conference, Powell pointed out that he would not give way if Trump asked him for resignation and in comments on Wednesday, he explained that “our independence is a matter of law.”
He added: “We are not removed, except for the cause. We give very long conditions, seemingly infinite conditions.”
Inflation, tariffs and Trump
Trump's criticism results from his view that, as he said on Thursday: “Basically, we have no inflation.”
The Fed rapidly raised the rates in 2022 and 2023 for slow borrowing and expenses and tame inflation, which constantly dropped from the summit of 9.1 percent in 2022 to 2.4 percent last month. Inflation is not far from the Fed target for two percent. The Fed reduced even three times at the end of last year.
But since then, Powell and most other Fed decision makers emphasized that they maintain rates due to the uncertainty caused by the wide Trump tariffs, including a 10 % tax on all imports and 145 percent of the import fee from China.
In the remarks on Wednesday in Chicago, Powell repeated that the Fed was waiting for greater clarity before making any movements and said that the tariffs would probably worsen inflation.
Powell said that the Fed was independent of politics, the position that the Fed Krzewnica had emphasized since at least the seventies. At that time, the Fed was widely seen as a deteriorating 15-year series of high inflation, surrendering to demands from the then President Richard Nixon to maintain low interest rates during the 1972 election.
Economic research suggests that an independent central bank is more likely to maintain inflation under control, because it is more likely to do unpopular things such as percentage rates to fight rising prices.
Investors from Wall Street largely prefer an independent Fed, although the stock exchange did not seem to respond to Trump's comments.
Powell says he won't have “influence”
Powell said on Wednesday that the Fed based his decisions only on what is best for all Americans.
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“This is the only thing we have ever done,” said Powell. “No political pressure will affect us.”
He also suggested that the central bank would focus on the fight against inflation following the tariffs, which would probably mean that they would maintain increased rates.
Trump complained that interest rates were still growing “because we have the president of the federal reserve who plays politics.” However, long -term rates increased after Trump announced his trade penalties.
Trump and members of his economic team said that they would like to fall long -term interest rates, which will make Americans cheaper borrowing houses, cars and equipment. However, the FED controls a short -term foot and can only indirectly affect long -term loan costs.
The case before the US Supreme Court may make it easier for the president to release the highest officials, such as the Chairman of the FED, to independent agencies. It is about Trump's two exemptions that the judges left when they consider the case.
Powell said he was watching the case carefully, but it may not apply to the Fed, given that the court in the past carved exemptions for the central bank. Trump's administration lawyers, trying to narrow down the focus of the case, also argued that it did not cover the Fed.
In an interview with the Bloomberg News campaign from 2024, Trump said that he would allow Powell to perform his term of office of the chairman. At the beginning of this month, Trump's best economic advisor, Kevin Hassett, said in a television interview that “there will certainly be no political coercion over the Fed.”
Powell began the second term of Trump in a relatively safe place with a low unemployment rate and inflation approaching two percent Fed's goals, conditions that could save him criticism of the president.
However, Trump's tariffs increased the threat of recession with higher inflation pressure and slower growth, a difficult place for Powell, whose mandate is price stabilization and maximization of employment.
Because the economy weakened because of Trump's movements, it seems that the president wants to attract Powell's guilt.