Washington: US President Donald Trump stated that he has no intention of dismissing Federal Reserve Chair Jerome Powell before the conclusion of his term leading the US central bank next year.
According to Qatar News Agency, Trump expressed that he has no plan to remove Powell, marking a significant change in his stance as he had recently intensified his criticism of Powell and did not exclude the possibility of taking the unprecedented action of firing him.
Powell, appointed by Trump during his first presidential term, is scheduled to remain as Fed chair until May 2026. He has firmly asserted that the president does not have the legal authority to remove him. CNBC highlighted concerns from critics and analysts who caution that the removal of the Federal Reserve chair, an entity that has traditionally maintained its independence from government intervention, could instigate market turmoil.
Moreover, multiple economists argue that firing Powell would not necessarily achieve the rate cuts Trump desires. Paul Ashworth, Chief North America Economist at Capital Economics, noted that dismissing Powell would likely be just the initial step toward dismantling the Fed’s independence. Ashworth asserted that if Trump is determined to lower interest rates, he would need to remove the other six Fed Board Members as well, which could provoke a more severe market backlash, leading to a decline in the dollar and an increase in long-term interest rates.
Powell serves as chair of both the Fed Board of Governors and the Federal Open Market Committee (FOMC), the body responsible for setting interest rate policy. Ashworth also pointed out that although FOMC members often select the president-appointed board of governors chair to lead them, they have the option to defy Trump and appoint someone else as the head of the rate-setting committee.