President Donald Trump appears to have taken a step back from his earlier aggressive stance against Federal Reserve Chairman Jerome Powell.
After days of strongly criticizing Powell and even suggesting he should be fired, Trump has now publicly stated that he has no plans to remove him from office.
Speaking from the Oval Office on Tuesday, Trump said, “I don’t want to talk about that because I have no intention of firing him,” referring to Powell.
This came after a sharp reaction from the financial markets, which saw steep losses in response to Trump’s earlier comments on social media.
Just a day earlier, Trump took to his social media platform, Truth Social, to express his dissatisfaction with Powell. He blamed the Fed chairman for not acting quickly enough to lower interest rates, especially in light of the economic pressure caused by the administration’s tariffs.
In his post, Trump referred to Powell as “Mr. Too Late” and accused him of being a “major loser,” claiming that a slowdown in the economy was inevitable unless the Fed reduced rates immediately.
This wasn’t an isolated comment. Over the past week, Trump has made several posts criticizing Powell, arguing that he should have followed the example of the European Central Bank (ECB), which has already moved to cut interest rates.
Trump’s growing frustration was aimed at pressuring Powell into action, but the approach caused alarm among investors and economists who saw it as a threat to the independence of the Federal Reserve.
On Monday, all three major stock market indexes—the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite—fell sharply, with losses of up to 972 points. The dip was directly linked to growing concerns over the U.S. economy and Trump’s continued pressure on the Fed.
However, by Tuesday, markets started to recover. The rebound came after a statement from Treasury Secretary Scott Bessent, who hinted at a potential “de-escalation” in the U.S.-China trade tensions. His comments calmed investor fears and pushed markets back into the green.
The sudden change in tone from Trump suggests he may be trying to stabilize investor confidence, especially with the 2024 election season drawing closer.
His initial attacks on Powell seemed aimed at shifting blame for slowing economic growth, but the market reaction may have forced him to rethink his strategy.
While Trump now claims he does not intend to fire Powell, the back-and-forth has raised fresh questions about the future of U.S. monetary policy and the Fed’s ability to operate without political interference.
The Federal Reserve is designed to be an independent body, and any sign of political pressure is usually met with concern from financial institutions, both in the U.S. and globally.
For now, investors and analysts will be watching closely to see if Powell responds to Trump’s criticism with a policy shift or if he maintains the Fed’s current stance.
The coming weeks will likely determine how this tension between the White House and the Fed plays out, especially as more economic data becomes available and decisions on interest rates come up in future Fed meetings.
Trump’s temporary pause in attacking Powell may calm the waters, but the damage to market confidence could take longer to repair.
It also serves as a reminder of how sensitive the financial markets are to presidential rhetoric, especially when it involves the central bank.
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