Trump Says No Plans to Fire Fed Chairman Jerome Powell, Lifting Markets
A Reversal on Federal Reserve Tensions
President Donald Trump calmed market fears by announcing he has “no intention” of dismissing Federal Reserve Chair Jerome Powell, marking a retreat from his recent barrage of criticisms.
“None whatsoever,” Trump declared in the Oval Office, adding, “the press runs away with things.”
This followed a series of week long threats, including a social media post stating Powell’s termination “cannot come fast enough,” which unsettled financial markets.
The reassurance prompted a swift market rally, with equity index futures surging nearly 2% as trading resumed Tuesday evening. Trump’s comments alleviated concerns about eroding the Fed’s independence, a cornerstone of global financial stability.
Yet, he maintained pressure on Powell to cut interest rates, stating, “We think that it’s a perfect time to lower the rate, and we’d like to see our chairman be early or on time, as opposed to late.”
The Fed, having lowered rates to a 4.25%-4.50% range late last year, remains cautious, grappling with the potential inflationary impact of Trump’s tariff policies alongside risks of slower growth.
Progress on China Trade Talks
In the same remarks, Trump expressed confidence in negotiating a trade deal with China that would “substantially” reduce tariffs on Chinese goods. “It won’t be zero,” he clarified, but suggested a significant reduction from current levels.
This outlook further lifted investor sentiment, countering earlier market declines driven by tariff uncertainties and Trump’s Fed criticisms. The combined effect had previously weighed on stocks, U.S. Treasuries, and the dollar.
Economic and Market Implications
The de-escalation has reduced fears of extreme outcomes like stagflation or a sovereign debt crisis, with Evercore ISI’s Krishna Guha calling it “a clear positive.”
While markets have stabilized, the Fed’s upcoming rate decisions and the trajectory of U.S.-China trade negotiations will be pivotal in sustaining this momentum amid ongoing economic uncertainties.