As the European Central Bank repeatedly cuts interest rates, Federal Reserve Chairman Powell seems to "not listen" to advice. US President Trump appears to be angry, naming Powell three times in a day and demanding rate cuts, even going so far as to say Powell should have been fired long ago.
On Thursday morning Eastern Time on the 17th, Trump posted on social media:
· The always-too-late and wrong Federal Reserve Chairman Jerome Powell released a report yesterday, which is yet another typical and complete "mess"!
· Powell should have lowered interest rates like the European Central Bank long ago, and he should definitely lower them now. The sooner Powell leaves, the better!
During Thursday's US stock midday trading, Trump called out Powell twice more.
Trump said he believes Powell is not doing his job properly. If he makes a request, Powell would have to leave. Powell does not make him happy. He is always slow to act.
Trump accused Powell of playing politics, saying he is terrible. US interest rates have risen and should be pushed down. Powell should cut rates. Trump also compared with Europe, saying Europe is cutting rates.
After a few dozen minutes, Trump "bombarded" Powell again, saying the Federal Reserve should cut rates, which is owed to the American people. Powell will face significant political pressure.
Trump said the only good thing Powell could do is cut rates. If Europe cuts rates and the Federal Reserve remains indifferent, it will put the US at a disadvantage. Costs are declining, and US inflation is minimal.
These remarks are clearly a response to Powell's hawkish statement from the previous night. On Wednesday, Powell reiterated his statement from over a week ago, saying the Federal Reserve can "completely wait until the situation is clearer before considering adjusting our policy stance." Powell believes that Trump's policies such as tariffs create high economic uncertainty, and the Fed wants to avoid tariffs persistently pushing up inflation.
In fact, Trump has long been dissatisfied with Powell. Trump feels Powell is "half a beat slow" and "too slow" in fighting inflation. He has repeatedly urged rate cuts on social media, telling Powell to "move quickly".
Supreme Court Decision May Affect Powell's Tenure
Earlier this week, the White House hinted at a potential Federal Reserve "leadership change". US Treasury Secretary Mnuchin stated that he and Trump have been "considering" the next Federal Reserve chairman and plan to start interviewing potential candidates in the fall.
This statement has reignited speculation about changes in Federal Reserve leadership. Renowned financial analyst Jim Bianco believes Powell may face two fates: either being directly fired by Trump or being marginalized, as the nominee for Powell's successor could make statements that undermine his authority.
Notably, a Supreme Court decision in May this year could become a "black swan" event this summer. Trump's government is preparing to request the Supreme Court dismiss two high-ranking federal agency officials.
Some analysts point out that the final judgment in this case could be a test of whether "Trump has the right to fire Federal Reserve Chairman Powell" - although current Federal Reserve law stipulates that firing the Fed chairman requires "just cause", if the Supreme Court overturns the Humphrey's Executor case precedent, it would significantly weaken this protective barrier and open the door for presidential intervention in Federal Reserve operations.
In other words, by changing legal rules, Trump might be able to "easily" fire the Federal Reserve chairman in the future.
On Wednesday, when asked about the political threats to his position, Powell stated that the Federal Reserve's independence is granted by US law, and the government cannot dismiss Fed officials without cause. He said: "Our (Federal Reserve) independence is a legal matter."
Powell stated that the Federal Reserve will continue to do its job without political influence. Regardless of political pressure, the Federal Reserve will perform its duties.
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