Trump says he hasn’t fired Jerome Powell despite reports
In a meeting with Bahrain’s crown prince, the president denied reports that he would fire Jerome Powell, the chairman of the Federal Reserve System.
President Donald Trump escalated a speech Wednesday about eliminating Federal Reserve Chairman Jerome Powell, telling reporters he supported Republican lawmakers firing the central bank chief.
Trump later denied that he planned to fire Powell, but many fiscal and economic experts say the attacks are also damaging financial markets, and perhaps the US political system.
“Indeed, rhetoric creates volatility and uncertainty among investors,” said Jack Ablin, chief investment officer at Cresset Capital, which has a $65 billion worth of assets. “Today was a real epitome. Earlier in the day, investors were worried that Trump would fire Powell. And we had a higher rate, lower stocks. And Trump came out and I wasn’t fired Powell.
Stocks closed on higher days, with US Treasury yields almost low.
“I talked about the concept of firing him,” Trump told reporters. They gathered in their oval offices to meet Prince Salman bin Hamad al Khalifa of Bahrain. “I said, ‘What do you think?’ Almost all of them said I should, but I’m more conservative than them.”
Later he said, “When we were talking about it, what do you do about it when I asked?
Trump nominated Powell to helm Powell in his first term, but he frequently criticized the central bank chief. He accused them of not cutting key interest rates, particularly since the start of the second term, to jump the economy and reduce federal debt payments.
Fed watchers are well aware that it’s nothing new for the president to put pressure on the central bank. Steve Blitz, chief US economist at GlobalData, was known to both Lyndon Johnson and Richard Nixon dislike the Fed chiefs they served during their tenure and attempted to put pressure on policies.
“The difference is that Trump believes that doing it publicly and doing it publicly gives him power,” Blitz told USA Today.
Blitz and other analysts also believe it is dangerous for Trump to be able to shake other lawmakers to his point of view. “He is the first (President) who somehow seems to be able to make the facility a crater. I don’t really understand that. Everyone says they’re afraid of him. Are you a patriot?”
Powell’s term as Fed Chairman ends in 2026, but he can remain governor of the Fed committee until 2028. Powell intends to provide his term and believes Trump has no legal authority to fire him.
In the May 22nd ruling, the majority of Supreme Court judges signaled that they believed Trump would not be allowed to fire Powell, claiming that the Federal Reserve is a “uniquely structured, semi-private organization” that is different from other independent bodies. The policy was part of the Supreme Court’s opinion that allowed Trump to fire two Federal Labor Commission members.
David Kotok, co-founder of the $3.5 billion-asset Cumberland Advisor, notes that under Powell’s leadership, the Fed manages competently through several crises in the clock, from the quick reach of the bank’s breakdowns in 2023 to a quick resolution of that crisis.
“It’s Jay Powell at work,” Kotok told USA Today. “To me, the man is a pillar of integrity and leadership, facing an onslaught of unnecessary and harmful verbal abuse on the United States, he will maintain his public attitude and discipline, maintaining his image of the world, and in our banking and financial system.
For investors, the lasting question is whether and when the market responds strongly enough to lead politicians to the backtrack.
One recent example took place in April after the White House announced its shocking tariff proposal. Investors have dumped bonds at the fastest pace in decades. They were concerned about the impact these tariffs had on US debt and the economy. Since then, tariff deadlines have changed frequently.
But investors have yet to respond vigorously to the notion that Trump can fire or bully Powell.
It’s part of the broad belief that the president will eventually become a cave, Blitz said, referring to the so-called “tacos,” or Trump, which always kicks out chickens — trade. The acronym describes the pattern in which the president announces large new tariffs, causing economic shocks, panic and stock declines. This will reverse the course later with pauses or reductions that will generate market rebounds.
“There’s an idea in the market that he’s bullying and bullying, bullying, trying to bully, but he never really does,” Blitz said. “But I think this is where there is danger. That’s what Trump pushes outside of the universe. People expect the universe fabric to push him back into the center and back.
