Donald Trump is not happy with the head of the Central Bank of the United States.
Here is why: Powell, who hurriedly reduced federal interest rates at 75 basic points before the 2024 elections, has been reluctant to further alleviate monetary conditions, citing the potentially inflationary effects of the new white house tariff policies.
Trump has been floating the idea of saying goodbye for a while. The regulator, on the other hand, has maintained since November that Trump lacks the legal authority to do so. Powell’s term is scheduled to end in May 2026 in any case.
“Jerome Powell has been very bad for our country,” Trump said during the weekend. “We should have the lowest interest rate on Earth, and we don’t do it. He simply refuses to do it.”
The coalition against Powell seems to be growing day by day. The director of the Federal Housing Finance Agency (FHFA)Bill Ablicte accused the president of the political bias and requested an investigation of the Congress about his leadership.
Republican members of Congress (Such senators Rick Scott and Tommy Tuberville, and the judicial president of the House of Representatives Jim Jordan) They have also criticized Powell’s actions in recent months.
Then is Kevin Warsh, a former governor of the Federal Reserve, and Powell’s potential replacement, who says it is time for “regime change” in the Fed. (I’m just naming some people, but the list is long).
Now, the Federal Reserve is technically independent, so Powell is protected from arbitrary dismissal and can only be eliminated “for cause”, which means there must be a serious and legally justified reason to say goodbye.
Powell’s critics are now using the renewal of the headquarters of the $ 2.5 billion of the Federal Reserve as a new angle of attack, claiming potential misconduct or that Powell deceived Congress in his testimony about renewal. (The project was launched years before Trump designated Powell in 2018).
The pressure has increased even more in recent days. The secretary of the Treasury, Scott Besent, said on Tuesday that a “formal process” to replace Powell was underway. A few hours later, Congresswoman Anna Paulina Luna tweeted that Powell’s dismissal was “imminent”, which sent the probabilities of polymer from the event to 27%.
Rumors did not decrease on Wednesday. Bloomberg and CBS reported today that Trump was looking to press the trigger soon, while the New York Times said the president had already written a letter to the effect.
However, Trump immediately said he was not planning to say goodbye to the president of the Fed, and even minimized the accusations of fraud about the renewal of the headquarters of $ 2.5 billion.
Where does that leave us? Let’s keep our eyes in the prize: CME FEDWatch indicates that there is only a 2.6% chance that rates decrease in the next Federal Open Market Committee (FOMC) Meeting, scheduled for July 30. However, these probabilities jump to almost 60% for September.
