Trump's slap on Powell this time "says it all"!!! Trump has always been straightforward. He uses body language and public statements to pressure the Federal Reserve Chairman, making it very clear: you have to listen to me, quickly lower interest rates.
A reporter asked Powell what could calm Trump's criticism? To be honest, it's difficult. What Trump wants is results—lower interest rates, the sooner the better, preferably before the election. Why? Lowering rates can stimulate the economy, and the stock market looks better, which is beneficial for his re-election campaign. He used to criticize Powell for raising rates too aggressively, and now with fluctuations in economic data, he can’t sit still and directly “reminds” him.
The key issue here is not how Powell responds to Trump's rhetoric, but whether the Federal Reserve can withstand such blatant political pressure. The independence of the Federal Reserve in decision-making is a tradition, precisely to prevent the president from messing with it for short-term electoral gains. Trump's actions amount to putting a knife to the Federal Reserve's throat. If Powell really can’t withstand the pressure and lowers rates early, it damages the credibility that the Federal Reserve has built over decades. How can the market trust them in the future? In the long run, this is not beneficial for the American economy. So, while this slap from Trump lands on Powell's back, the real test is whether the Federal Reserve can hold its ground. Powell's biggest challenge now is not answering reporters' questions, but how to stand tall under the president's "heavy blow", not to bend down, and not to let the independence of the central bank become a casualty of the election. That is much more painful than getting slapped on the back of the head.
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