However, sources suggest that if the Fed does not comply, Trump may escalate tensions by attempting to dismiss Fed Chairman Jerome Powell.
Trump’s Frustration with the Fed Reaches New Heights
Trump has long expressed dissatisfaction with the Fed, but his frustration has intensified following its recent decision to keep interest rates steady at 4.25% to 4.5%. The president has used platforms like Truth Social and public appearances to call for lower borrowing costs, arguing that such measures would stimulate economic growth and offset potential slowdowns from his trade policies.
Despite Trump’s repeated calls for rate cuts, Powell has signaled caution, particularly by warning about the potential inflationary impact of Trump’s upcoming tariff measures. The Fed’s latest economic forecast indicates that inflation is unlikely to decline further this year, largely due to expected price hikes from additional tariffs.
Trump’s Tariff Plans Add to the Fed’s Dilemma
Trump plans to impose new reciprocal tariffs on April 2, which he has dubbed “Liberation Day.” The tariffs are designed to counter foreign tariffs on American goods, but economists warn that such policies could complicate the Fed’s ability to maintain economic stability. Powell has raised concerns, stating that tariff-induced inflation could delay any progress in lowering inflation.
Speculation Over Trump’s Power to Fire Powell
The tension between Trump and Powell has sparked speculation about whether Trump could attempt to fire the Fed chairman, a move that could create significant market upheaval. Powell’s term runs until 2026, and he has previously stated he would not resign early, even under presidential pressure. While some analysts believe Trump would refrain from such a drastic move due to potential market turmoil, others caution that his aggressive stance could lead to an attempt to centralize monetary policy under his control.
Trump’s history of removing independent agency officials, including two Democratic members of the Federal Trade Commission (FTC), has fueled speculation about his willingness to challenge the norms that protect independent agencies. Legal experts point to a 1935 Supreme Court ruling, Humphrey’s Executor v. United States, which protects members of independent agencies from being removed without cause. If Trump were to defy this precedent, it could result in a legal battle with the potential to ripple through financial markets.
Editorial Team
Reporter at Coindoo
Source: https://coindoo.com/trump-pushes-for-fed-rate-cuts-allegedly-threatens-to-dismiss-chairman-jerome-powell/