President Trump said on Tuesday that he had “no intention” of firing the Federal Reserve chair, Jerome H. Powell, even as he repeated his calls for the central bank to lower interest rates. The president made the remark during an event at the White House.
The prospect that Mr. Trump would seek to infringe on the politically independent Fed had spooked financial markets in recent days, spurring an unsettling sell-off in stocks, government bonds and the dollar. Mr. Trump’s advisers have repeatedly told him that firing Mr. Powell is legally and financially fraught — and that the uncertainty could cause a significant downturn in financial markets.
Mr. Trump, at least for the moment, has appeared persuaded, The New York Times reported last week.
The president’s ire with Mr. Powell stems from his desire for the Fed to lower interest rates and the central bank’s hesitancy so far to do so.
In a speech last week, Mr. Powell warned that Mr. Trump’s tariffs were poised to lift inflation and lower growth more than the central bank expected. His emphasis that the Fed had an “obligation” to make sure price pressures did not morph into a persistent inflation problem suggested the bar for the central bank to lower interest rates was high.
Those comments set off a tirade from Mr. Trump, which included threats about the president’s ability to remove Mr. Powell. On Monday, Mr. Trump reiterated his calls for lower rates, saying that there was “virtually no inflation” in the United States and that costs for energy and “most other ‘things’” were falling.
“With these costs trending so nicely downward, just what I predicted they would do, there can almost be no inflation, but there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW,” Mr. Trump wrote on social media, referring to Mr. Powell.
On Tuesday, Mr. Trump echoed that message, saying it was the “perfect time” for the Fed to take action.
While Mr. Trump’s comments are certain to alleviate immediate concerns about Mr. Powell’s fate, his administration is currently testing its ability to challenge the legal safeguards that protect the Fed’s political independence.
The Supreme Court is set to hear a case regarding the president’s ability to remove officials from independent agencies. Its ruling could have ramifications for the Fed.
So far, Mr. Powell has staunchly defended his institution’s independence and has argued that it is a “matter of law.”
Colby Smith covers the Federal Reserve and the U.S. economy for The Times.
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