US President Donald Trump attacked the president of the American federal reserve on Thursday for not having reduced interest rates and said he could dismiss him if he wanted, renewing a threat from his first mandate which could trigger a major legal confrontation on the issue of long -standing political independence of the Central Bank.
“If I want it, he will be released from there very quickly, believe me,” said Trump in the oval office while answering journalists’ questions during a visit with Italian Prime Minister Giorgia Meloni. “I’m not happy with him.”
Trump’s comments followed A publication on his social media site In which the Republican President called Powell to reduce the short -term interest rate of the Fed and said: “Powell’s termination cannot come quickly enough!”
Powell’s mandate as president ended in May 2026.
Powell was initially appointed by Trump in 2017 and was appointed to another four -year term in 2021 by the president of the time, Joe Biden.
During a press conference in November, Powell said he would not move if Trump asked him to resign and, in remarks on Wednesday, clearly said that “our independence is a matter of law”.
He added: “We are not removable, except for the cause. We serve very long terms, apparently endless.”
Inflation, prices and Trump
Trump’s criticism stems from his point of view that, as he said on Thursday, “we have essentially no inflation”.
The Fed has increased significantly the rates in 2022 and 2023 to slow down loans and expenses and tame inflation, which regularly dropped a peak of 9.1% in 2022 to 2.4% last month. Inflation is not far from the 2%Fed objective. The Fed even reduced rates three times at the end of last year.
But since then, Powell and most other Fed decision -makers have stressed that they have kept the rates pending due to the uncertainty created by Trump’s radical prices, including a 10% tax on all imports and a 145% levy on imports from China.
In the remarks on Wednesday in Chicago, Powell reiterated that the Fed was waiting for greater clarity before making movements and said that the prices would probably aggravate inflation.
Powell has constantly argued that the Fed is independent of politics, a position that the Fed chairs underlined since at least the 1970s. At the time, the Fed was largely considered to be aggravation of a series of high inflation by giving in to the requests of the president of the time, Richard Nixon, to maintain low interest rates in the prospect of the 1972 elections.
Economic research has suggested that an independent central bank is more likely to keep inflation under control, because it is more willing to do unpopular things, such as interest rates, to combat the price increase.
Wall Street investors also largely prefer an independent Fed, although the stock market does not seem to react to Trump’s comments.
The nourished will not be “influenced,” says Powell
Powell said on Wednesday that the Fed would base its decisions only on what is best for all Americans.
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“This is the only thing we are going to do,” said Powell. “We are never going to be influenced by political pressure.”
He also suggested that the central bank will focus on the fight against inflation as a result of prices, which would probably mean that they would maintain high rates.
Trump has complained that interest rates are still increasing “because we have a president of the federal reserve that makes politics”. However, longer -term rates increased after Trump announced his commercial sanctions.
Trump and his economic team members said they would like longer -term interest rates to drop, making Americans cheaper to borrow to buy houses, cars and devices. However, the Fed controls a short -term rate and can only indirectly affect borrowing costs in the longer term.
A case before the United States Supreme Court could allow a president to more easily dismiss senior officials, such as the president of the Fed, in independent agencies. In question, two Trump layoffs, which the judges let stand up while they consider the case.
Powell said he was watching the case closely, but that he may not apply to the Fed, since the court has made exemptions from the Central Bank. Lawyers of the Trump administration, seeking to restrict the objective of the case, also argued that it does not imply the Fed.
In a campaign interview in 2024 with Bloomberg News, Trump said that he would allow Powell to serve his mandate as president. Earlier this month, Trump’s best economic adviser, Kevin Hassett, said in a television interview that “there will be no political coercion on the Fed, that’s for sure”.
Powell began Trump’s second term in a relatively secure location with a low unemployment rate and inflation progressing closer to the objective of two percent of the Fed, conditions that could have saved him from the president’s criticism.
However, Trump’s prices have increased the threat of a recession with higher inflationary pressures and slower growth, a difficult place for Powell, whose mandate is to stabilize prices and maximize employment.
The economy weakening due to Trump’s movements, the president seems to try to blame Powell.
