"New Federal Reserve News Agency" quotes informed sources (noted as 'exclusive report') stating that U.S. Treasury Secretary Bessent opposes firing Federal Reserve Chair Powell.
Bessent presented several reasons to Trump. From these reasons, Bessent is not 'strongly supporting' Powell, but rather using reason and reality to help Trump 'stop the bleeding.'
First, Federal Reserve officials have hinted that they may lower interest rates twice before the end of the year: Powell does not need to be fired to lower rates, so why take the risk?
Second, firing Powell could trigger market panic: investors may feel that the President is interfering with monetary policy, which would be detrimental to the independence of the financial system.
Third, legal procedures could be troublesome: Powell could sue, and the litigation could drag into the spring—just when Powell's term is set to end.
Fourth, firing Powell does not guarantee a quick confirmation of a successor. Under current law, the Federal Reserve Vice Chairman exercises authority in the absence of the Chairman. Vice Chairman Jefferson, appointed by Biden, is also an ally of Powell.
Trump's advisors privately acknowledge that firing Powell could put Trump in a lose-lose situation: he would bear the costs of the market's adverse reaction while being unable to immediately influence monetary policy.
The real influence lies in the 'successor.' Trump is considering announcing his nomination for the next Federal Reserve Chair before September; he may consider some candidates who have not yet publicly appeared, using their public speeches to pressure the Federal Reserve (to pledge loyalty to Trump) to lower interest rates.
For investors, there is a risk period approaching where monetary policy transparency may decrease, and the market will repeatedly speculate about political intentions interfering with interest rates.
