Trump VS Powell:
The ongoing feud between US President Donald Trump and Federal Reserve Chair Jerome Powell centers around Trump's criticism of Powell's monetary policy decisions, particularly regarding interest rates and tariffs.
Here's a breakdown:
1- Trump's Criticism: Trump has repeatedly called for Powell's "termination" and accused him of being "too late and wrong" in his decision-making. Trump wants immediate rate cuts, while Powell is cautious due to inflation concerns.
2- Tariffs and Inflation: Powell warned that Trump's proposed tariffs could fuel inflation and stall economic growth, prompting Trump to lash out. The president's tariffs could trigger stagflation, a combination of high inflation and economic slowdown.
3- Fed Independence: The Federal Reserve Act protects the central bank's independence, limiting presidential authority to remove a Fed chair only "for cause," such as legal or ethical misconduct. Policy disagreements aren't sufficient grounds for removal.
4- Powell's Term: Powell's term as Fed Chair expires in May 2026, which would give Trump the opportunity to appoint a new Fed chief if reelected.
5- Potential Impact: The tension between Trump and Powell raises questions about the Fed's independence and its potential implications on the economy. A pending Supreme Court case could clarify presidential power over independent agencies, but its impact on the Fed remains uncertain.
Key Statements from Trump:
a- "His termination cannot come soon enough."
b- "If I'm reelected, he'll be out of there real fast, believe me."
Powell's Stance:
a- "Our independence is a matter of law."
b- Powell has no plans to step down before his term ends in May 2026, emphasizing the importance of the Fed's independence.