Washington: U.S. President Donald Trump quit his earlier threat to fire Fed Chairman Jerome Powell, saying he has no plans to remove him, but instead urges the central bank to lower interest rates to support the economy.
Wall Street investors abandoned U.S. assets on Monday, and Trump all three major indexes fell after a series of swipes by U.S. Central Bank chief Jerome Powell.
The president has criticized Powell for warning that all the White House tariffs could reignite inflation.
“I have no intention of firing him,” Trump said Tuesday.
“I would like to see him more active in the idea of lowering interest rates – it’s a great time to lower interest rates.
“If he doesn’t do that, is that the end? No.”
Trump’s recent outbreak of Powell has incited concerns that he would remove him, and White House economic adviser Kevin Hassett said last week that the president is looking at whether it can be done.
Trump has repeatedly said he now wants to cut tax rates to help stimulate economic growth as he launches tariff plans and threatens to fire Powell if he doesn’t comply.
“If I want him out, he will leave there soon, believe me,” Trump said Thursday.
Fear of inflation
Powell said he had no plans to step down early, adding that he believed the bank’s independence from monetary policy was a “legal issue.”
Many economists believe that government tariff plans, including a 10% “baseline” rate for imports from most countries, will put up pressure on prices and cool economic growth.
When asked about the possibility of the U.S. administration trying to fire Powell before the end of its term, ECB head Christine Lagarde told CNBC on Tuesday that she hoped it was “not on the table.”
The president has no direct authority to fire the Fed governor, but Trump can try to make Powell stand out by demonstrating a long process of justifying doing so.
Powell had earlier warned that Trump’s massive tariffs could give the Fed an enviable position to choose between inflation and unemployment.
Wall Street stocks rebounded Tuesday as U.S. officials were optimistic about trade talks with China.
In a comment from White House press secretary Karoline Leavitt, Trump “has reached an agreement for China, and all three main indexes have risen.
Thealing.com analyst Patrick O’Hare puts a part of the rebound attitude on the sentiment that Trump would not fire Powell, but instead “simply set him to blame in the case of a recession.”
