#USChinaTensions

Francesco Bianchi, an economics professor at Johns Hopkins University, has expressed doubt about U.S. President Donald Trump actually following through on his threat to fire Federal Reserve Chairman Jerome Powell, according to BlockBeats. Nevertheless, Bianchi points out that Trump’s public push for interest rate cuts could still influence the Fed’s decision-making process. After Trump made the threat last week, the Fed became aware it could face public blame if a recession hits.

Although Powell has signaled no urgency to cut rates, Trump floated the idea of removing him, which rattled the markets and raised fears about the Fed’s independence. Bianchi believes Trump is unlikely to act on the threat, noting that Powell’s term is due to expire in about a year. Replacing him now would create unnecessary turmoil, outweigh any gains, and possibly lead markets to expect more aggressive rate hikes.