In a surprising shift that soothed financial markets, President Donald Trump has publicly stated he has no intention of firing Federal Reserve Chair Jerome Powell, despite his ongoing criticism of the Fed’s interest rate policy.
Speaking from the Oval Office on Tuesday, Trump declared, “I have no intention of firing him,” referring to Powell. He did, however, express his desire for the Fed to move more decisively on rate cuts, adding, “I would like to see him be a little more active in terms of his idea to lower interest rates.”
The announcement was met with immediate relief on Wall Street. U.S. stock index futures surged nearly 2% following Trump’s comments, reversing the previous day’s losses which were fueled by investor anxiety over his attacks on the Fed during the Easter weekend.
Krishna Guha, Vice Chairman of Evercore ISI, said, “Whether this move was strategic or reactive to market backlash, it’s a clear positive. It significantly lowers the chances of extreme scenarios like stagflation or a sovereign debt crisis stemming from Fed instability.”
Adding to the optimism, Trump also hinted at progress on the China trade front. He suggested that a deal with Beijing could lead to “substantially” lower tariffs on Chinese goods—though he clarified they won’t be eliminated entirely. “It won’t be zero,” he noted, but rates will be much lower than current levels.
This double-barreled relief—less tension with the Fed and a potential tariff reprieve—sparked renewed investor confidence. Just a day earlier, U.S. assets were under heavy pressure from Trump’s social media rants calling Powell a “major loser” and suggesting he be removed immediately.
Trump’s tensions with Powell aren’t new. They stretch back to his first term, when he promoted Powell to Fed Chair only to grow frustrated by his steady rate hikes. Though Trump has openly mused about removing Powell, legal experts and Fed watchers note that firing a central bank chief without cause would challenge the spirit of the Federal Reserve Act of 1913.
While the law allows the President to appoint and, in some cases, remove Fed governors, it doesn’t provide a clear path to removing the Fed Chair over policy disagreements. Nonetheless, Trump has claimed, “If I wanted him out, he’d be gone real fast.”
Currently, the Fed’s benchmark interest rate stands at 4.25%–4.50%, after a full percentage point cut late last year. Despite inflation concerns from Trump’s tariff policies, the Fed has held rates steady at its last two meetings, waiting to assess economic data before taking further action.
Analysts expect up to three rate cuts by the end of the year, down from earlier expectations of four. The next Fed policy meeting is scheduled in two weeks.
In the meantime, while employment and retail sales remain strong, business and consumer confidence surveys are declining. The International Monetary Fund (IMF) also lowered its global and U.S. growth forecasts this week, citing the uncertainty created by Trump’s aggressive trade agenda.
