Trump "changed his words": He didn't plan to fire Powell, now is the perfect time to cut interest rates

Author: Zhao Yuhe, Wall Street News

U.S. President Trump, who has previously criticized Fed Chairman Powell for failing to cut interest rates as soon as possible and even threatened to fire him, said on Tuesday that he had no intention of firing Powell despite his still being unhappy with the Fed's failure to cut interest rates more quickly.

When asked if he confirmed that he was not seeking to remove Powell from office, Trump replied in the Oval Office of the White House: "Absolutely no, never."

"This is a media rumor. No, I have no intention of firing him. I just hope he can be more active in the interest rate cut."

"If he doesn't do that, will it be the end of the world? No. But now is indeed the right time. Anyway, I have no intention of firing him."

However, Trump still reiterated his criticism of Powell.

"We think it's a great time to cut rates and hope our chairman will act in advance or on time, rather than lag behind the situation."

Trump has been pressuring Powell for a few days to cut interest rates. Just Monday, Trump also called Powell a "complete loser" and suggested that the Fed's previous interest rate cuts were intended to help former U.S. President Biden.

Last week, Trump said he couldn't wait to see Powell "dismissed" and insisted that if he tried to dismiss him, Powell would leave. Kevin Hassett, director of the White House National Economic Commission, told reporters last Friday that Trump is studying whether he has the right to fire Powell, after the president repeatedly criticized the Fed on social media and in public speeches.

In addition, Trump slammed Powell for 0.25 percentage points to 2.25% last week, complaining that the Fed was not cutting interest rates quickly enough. Trump once called Powell a "complete loser" and said: "If I want him to step down, he will leave soon" and urged an immediate rate cut, a move that has raised concerns about his possible interference in the independence of the central bank.

Trump's attitude changes calm market sentiment US stocks rise after

trading

Analysts believe that this statement aims to calm market tensions and also marks a significant change in Trump's attitude. He has previously continuously increased his criticism of Powell and once refused to rule out unprecedented measures and dismiss him, causing market turmoil.

On Monday, as Trump continued to severely criticize Powell and even threatened to fire, US stocks, US bonds and the US dollar fell together, resulting in a "three-kill of stocks, foreign exchange and debt". Currencies such as gold and safe-haven Swiss francs accelerated, and gold prices hit a new record high.

After Trump expressed his inadvertent intention to fire Powell on Tuesday, the S&P 500 ETF rose 1.2% after the market closed, while Apple rose more than 2.7%. Brent crude fell $1.02/barrel in 5 minutes to $66.74/barrel. USD/CHF rose 0.0069 in 5 minutes to 0.8198. The euro/USD fell by more than 1.0% intraday to 1.1365.

U.S. Treasury bonds and the dollar showed greater stability on Tuesday as the White House said it made progress in trade talks pushing for a reduction in the full tariffs announced earlier this month. Although the 10-year Treasury yield was almost unchanged, the 2-year yield rose to 3.82% due to weak auction demand.

According to a U.S. Supreme Court jurisprudence 90 years ago, the president has no right to fire Powell unless he can prove serious dereliction of duty or misconduct by federal officials. Powell has repeatedly stated that the president has no authority to dismiss him and he will not leave before the end of his term, which will end in 2026.

The White House also defended Trump's criticism of Powell earlier on Tuesday, saying the president "has the right to express his dissatisfaction with the Federal Reserve." Powell's analysis suggests that tariffs could cause economic growth to stagnate and push up inflation, which would limit the Fed's room for further rate cuts, angering Trump.