logo
Firing Powell would do nothing to help Trump on interest rates

Firing Powell would do nothing to help Trump on interest rates

Politico17-07-2025
Presented by
Editor's note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our subscribers each morning at 5:15 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day's biggest stories. Act on the news with POLITICO Pro.
Quick Fix
For a moment on Wednesday, it looked like President Donald Trump would finally attempt the improbable and fire Federal Reserve Chair Jerome Powell. But shortly after reports surfaced that Powell could soon be headed for the exits, Trump told reporters gathered in the Oval Office that the central banker's job is safe — at least for now.
'I don't rule out anything, but I think it's highly unlikely,' Trump said, adding that he would only fire Powell in the event of misconduct related to the Fed's costly headquarters renovation. He then reverted to his most frequent line of attack: 'I think he's not doing a good job. He's got a very easy job to do. Know what he has to do? Lower interest rates.'
The battle over Powell's future at the Fed — and the future of the Fed itself — isn't going away. So, let's get this out of the way: Firing Powell for cause would do nothing to achieve Trump's goal to quickly lower borrowing costs.
For one thing, Powell could mount a legal challenge to keep his job by arguing that the 'for cause' removal was actually a pretext for Trump's public opposition to his stance on rates. The Supreme Court has signaled that the president can't summarily dismiss central bankers over policy decisions, and Powell allies have noted that Trump often mixes critiques about the Fed's renovation with complaints about monetary policy. That could help Powell if he sought an injunction or court-ordered reinstatement to serve the remainder of his term as chair, which expires in May.
'There's no way that Donald Trump is going to intimidate Jay Powell into doing something he doesn't want to do,' former Fed Vice Chair Donald Kohn said Wednesday.
In the meantime, investors and CEOs would have to wrestle with major questions about the White House's influence over rate decisions. The central bank's relative independence from political interference is fundamental to faith in U.S. markets and is widely viewed as a bulwark against inflation. Wall Street leaders are throwing up warning flags. As JPMorgan Chase CEO Jamie Dimon cautioned this week, 'playing around with the Fed can often have adverse consequences.'
Stocks sank during the brief window on Wednesday when it appeared as though Powell's days were numbered. Perhaps more importantly for Trump, who has been open about his sensitivity to bond market fluctuations, the 10-year Treasury yield — a key determinant of financing costs charged to consumers and businesses — spiked.
'If your goal is lower rates, that may not be the most direct route,' said Mike Pugliese, a senior economist at Wells Fargo who covers monetary and fiscal policy.
But suppose Powell acquiesced in this (hypothetical) firing, or lost a legal challenge related to that dismissal. It would still take time for Trump to nominate a replacement and get that person confirmed by the Senate. And given the value lawmakers from both parties place on Fed independence, that would represent a major political challenge against a confounding economic backdrop.
Republican Sen. John Kennedy, a member of the Senate Banking Committee, told reporters that he doesn't believe 'a president, any president, has the authority to fire the Federal Reserve chair.' And Sen. Kevin Cramer (R-N.D.) – though highly critical of Powell's stewardship — told Jasper Goodman that firing Powell with less than a year remaining as chair could 'infuse chaos' at a time when Fed policymakers have already indicated they're looking to lower rates as soon as they can.
Until a replacement is confirmed, members of the Federal Open Market Committee would be able to appoint their own chair. Over the last few weeks, many Fed officials — with the notable exception of Vice Chair for Supervision Michelle Bowman and Gov. Christopher Waller — have echoed Powell's assertion that the central bank is in no rush to lower interest rates until there's greater clarity around how Trump's new tariffs have affected prices and employment.
This week's inflation report contained evidence that tariff-related price increases are starting to take hold — something Powell has warned as a possibility for months. After the report was released, Dallas Fed President Lorie Logan and Boston Fed President Susan Collins both said the central bank doesn't need to cut rates soon.
What's more, while the Fed has already ceded ground to the White House on bank regulation — and aligned closer to Trump's priorities in areas like climate policy and diversity — there's far less institutional appetite to do the same with regard to rates.
'They already compromised on regulation. They've compromised DEI, climate change — all those things,' Kohn said. 'But monetary policy is the core.'
IT'S THURSDAY — As always, send MM tips and pitches to Sam at ssutton@politico.com.
Driving the Day
Federal Reserve Governor Adriana Kugler speaks at a Housing Partnership Network symposium at 10 a.m. … Fed Governor Lisa Cook speaks at the National Bureau of Economic Research's Digital Economics and Artificial Intelligence Conference at 1:30 p.m. … House Financial Services ranking member Maxine Waters speaks at a Brookings event at 11:30 a.m. … Fed Governor Christopher Waller speaks at a Money Marketeers of NYU dinner at 6:15 p.m. …
What's next – Powell's fate may hinge on the ability of Trump's top allies to convince the president that the Fed's insulation from political influence is a benefit to his own agenda, Victoria Guida reports. 'Having a Fed chair who is not simply a yes man is a way to help head off the kind of damaging inflation that sank Democrats in 2024,' she writes. 'That is, investors and businesses have to believe that the central bank is willing to do what's necessary to avoid inflation, even if that means higher rates.'
Thune on Powell — 'I think the markets want an independent Federal Reserve. I think they want a central bank that isn't subject to the whims of politics,' Majority Leader John Thune of South Dakota said in an appearance on Fox News on Wednesday night, adding that he thinks Powell will serve out his term. 'My assumption is – based on what the president said today —that he is not going to do anything about this any time soon.'
— Despite Trump's repeated attacks on Powell, the Fed chair's support among Republicans has actually increased since Trump returned to office, The NYT's Ruth Igielnik reports.
Green light for crypto bills — House conservatives struck a late-night deal with GOP leaders on Wednesday to clear the way for the chamber to take up a slate of cryptocurrency legislation, our Jasper Goodman reports from Capitol Hill.
The conservative hard-liners, who tanked a procedural vote on the crypto bills on Tuesday and then froze the House floor for much of the day Wednesday in opposition to the effort, backed down after GOP leaders agreed to attach a provision that would ban a central bank digital currency to a must-pass defense authorization bill later this year.
The GOP rebels had been pushing to merge the CBDC ban bill with a sweeping crypto market structure overhaul, but that plan met resistance from the leaders of the House Financial Services and Agriculture committees. Most Democrats oppose a CBDC ban, and the chairs of those panels didn't want to kill off Democratic support for their market structure proposal, which they are hoping to send to the Senate with widespread bipartisan buy-in.
The House is now set to vote in the coming days on Senate-passed stablecoin legislation that will then go to Trump's desk, Financial Services Chair French Hill's sweeping market structure bill and a third measure that would ban a CBDC.
The deal to unfreeze the floor came together following a late-night meeting in House Speaker Mike Johnson's office. Trump called in at the very end and was briefed on the agreement, according to two people in the room granted anonymity to describe a private discussion. 'He's happy with it,' one of the people said.
The Economy
Mixed signals — The Fed's survey of regional business contacts found that economic activity 'increased slightly' in June. Still, 'Uncertainty remained elevated, contributing to ongoing caution by businesses.' The Fed's gauge for domestic industrial capacity and production reflected an expansion, improving on previous months.
— And wholesale price inflation was flat in June, according to the Labor Department's Producer Price Index. Nevertheless, economists at Bank of America Global Research expect the core Personal Consumption Expenditures index — one of the Fed's most closely watched indicators — to climb to 3 percent by July.
Wall Street
A good quarter for Big Banks — Market turmoil triggered by fast-shifting tariff policies helped pump up trading businesses at Goldman Sachs and Morgan Stanley, according to The WSJ.
Healthy consumer? — At BofA, which boasts a large consumer footprint, CEO Brian Moynihan told Bloomberg that consumers are 'continuing to spend more.'
'They've got money in their accounts, they're employed and the wage growth has been relatively strong. So they're in pretty good shape,' he said.
We'll get an update on June retail sales from the Census Bureau at 8:30 a.m.
On the Hill
Short memories — Sen. Elizabeth Warren (D-Mass.) is warning that the GOP's policy mix of pro-crypto legislation and financial deregulation is drawing uncomfortable parallels to the events that led to the global financial crisis, Katherine Hapgood reports.
Senate Small Biz markup — The Senate Small Business panel passed legislation out of committee that would double Small Business Administration 7(a) manufacturing loan limits to $10 million and double the statute of limitations on SBA COVID-era fraud to 10 years, Katherine reports. The bills passed by unanimous voice vote during Wednesday's markup.
At the White House
Never mind — Trump's immigration crackdown is starting to dent his approval ratings (and the supply of labor). Just 41 percent of Americans polled by Reuters/Ipsos supported the president's immigration agenda.
The Epstein saga — From Jake Traylor: 'President Donald Trump on Wednesday trashed many MAGA members, condemning their ongoing push for files related to Jeffrey Epstein and bemoaning that they are playing into Democrats' hands.'
Trade
Softening — From Bloomberg: 'Trump has dialed down his confrontational tone with China in an effort to secure a summit with counterpart Xi Jinping and a trade deal with the world's second-largest economy, people familiar with internal deliberations said.'
Big fish — The president also said he'll send letters to 150 smaller countries announcing their tariff rates, Doug Palmer reports.
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Official fired during President Donald Trump's first term appointed president of embattled US Institute of Peace
Official fired during President Donald Trump's first term appointed president of embattled US Institute of Peace

Chicago Tribune

time3 minutes ago

  • Chicago Tribune

Official fired during President Donald Trump's first term appointed president of embattled US Institute of Peace

A senior State Department official who was fired as a speechwriter during President Donald Trump's first term and has a history of incendiary statements has been appointed to lead the embattled U.S. Institute of Peace. The move to install Darren Beattie as the institute's new acting president is seen as the latest step in the administration's efforts to dismantle the embattled organization, which was founded as an independent, non-profit think tank. It is funded by Congress to promote peace and prevent and end conflicts across the globe. The battle is currently being played out in court. Beattie, who currently serves as the under secretary for public diplomacy at the State Department and will continue on in that role, was fired during Trump's first term after CNN reported that he had spoken at a 2016 conference attended by white nationalists. He defended the speech he delivered as containing nothing objectionable. A former academic who taught at Duke University, Beattie also founded a right-wing website that shared conspiracies about the Jan. 6 attack on the U.S. Capitol, and has a long history of posting inflammatory statements on social media. 'Competent white men must be in charge if you want things to work,' he wrote on October 2024. 'Unfortunately, our entire national ideology is predicated on coddling the feelings of women and minorities, and demoralizing competent white men.' A State Department official confirmed Beattie's appointment by the USIP board of directors, which currently includes Secretary of State Marco Rubio and Secretary of Defense Pete Hegseth. '(W)e look forward to seeing him advance President Trump's America First agenda in this new role,' they said. The USIP has been embroiled in turmoil since Trump moved to dismantle it shortly after taking office as part of his broader effort to shrink the size of the federal government and eliminate independent agencies. Trump issued an executive order in February that targeted the organization and three other agencies for closure. The first attempt by the Department of Government Efficiency, formerly under the command of tech billionaire Elon Musk, to take over its headquarters led to a dramatic standoff. Members of Musk's group returned days later with the FBI and Washington, D.C., Metropolitan Police to help them gain entry. The administration fired most of the institute's board, followed by the mass firing of nearly all of its 300 employees in what they called 'the Friday night massacre.' The institute and many of its board members sued the Trump administration in March, seeking to prevent their removal and to prevent DOGE from taking over the institute's operations. DOGE transferred administrative oversight of the organization's headquarters and assets to the General Services Administration that weekend. District Court Judge Beryl A. Howell overturned those actions in May, concluding that Trump was outside his authority in firing the board and its acting president and that, therefore, all subsequent actions were also moot. Her ruling allowed the institute to regain control of its headquarters in a rare victory for the agencies and organizations that have been caught up in the Trump administration's downsizing. The employees were rehired, although many did not return to work because of the complexity of restarting operations. They received termination orders — for the second time, however, — after an appeals court stayed Howell's order. Most recently, the U.S. Court of Appeals for the D.C. Circuit denied the U.S. Institute of Peace's request for a hearing of the full court to lift the stay of a three-judge panel in June. That stay led to the organization turning its headquarters back over to the Trump Administration. In a statement, George Foote, former counsel for the institute, said Beattie's appointment 'flies in the face of the values at the core of USIP's work and America's commitment to working respectfully with international partners' and also called it 'illegal under Judge Howell's May 19 decision.' 'We are committed to defending that decision against the government's appeal. We are confident that we will succeed on the merits of our case, and we look forward to USIP resuming its essential work in Washington, D.C. and in conflict zones around the world,' he said.

Sunday shows preview: Trump remains embroiled in Epstein drama as tariff deadline looms
Sunday shows preview: Trump remains embroiled in Epstein drama as tariff deadline looms

The Hill

time3 minutes ago

  • The Hill

Sunday shows preview: Trump remains embroiled in Epstein drama as tariff deadline looms

The Trump administration and Cabinet members remain entangled in a saga entrenched in controversy over files related to convicted sex offender Jeffrey Epstein, which is likely to be a focus of this week's Sunday shows. Members of Congress and the public are continuing to call on leaders to release the names of past clients, associates and businessmen linked to Epstein's dealings, urging President Trump to make good on his campaign promise to provide transparency on the deceased criminal's actions. Their push for more information follows a July joint memo from the FBI and Justice Department (DOJ) that confirmed Epstein kept no 'client list' and said no further files tied to the late financier would be released by the federal government. Epstein's longtime partner, Ghislaine Maxwell, agreed to speak with Deputy Attorney General Todd Blanche this week about the international sex trafficking ring run by the two. 'This was a thorough, comprehensive interview by the Deputy Attorney General. No person and no topic were off-limits. We are very grateful. The truth will come out,' Maxwell's attorney David Oscar Markus said in a statement to NewsNation, the sister network of The Hill. Maxwell was granted limited immunity amid her push to appeal her conviction before the Supreme Court. DOJ officials have opposed the effort but continue to applaud her cooperation while the president has not completely ruled out the possibility of pardoning Epstein's accomplice, who's now serving a 20-year sentence behind bars. Lawmakers disgruntled by the lengthy delay to unveil new evidence voted Tuesday to subpoena Maxwell to testify before the House Oversight Committee. A House Oversight subpanel on Wednesday approved several subpoenas including one directing the DOJ to turn over materials relating to the Epstein files. Rep. Michael McCaul (R-Texas) and Rep. Riley Moore ( will likely discuss the huddle amongst their GOP colleagues this week on Sunday shows, addressing their party's strategy to investigate Epstein's criminal dealings without stepping on the Trump administration's toes. McCaul is set to appear on CBS's 'Face the Nation' and Moore is slated to appear on CNN's 'State of the Union.' Minority Leader Hakeem Jeffries (D-N.Y.) is set to address the Democratic push to force transparency on the president's ties to Epstein's illegal actions on his Sunday appearance on ABC's 'This Week.' Amidst the legislative drama, the White House is courting foreign nations to coax mutually beneficial trade deals between the U.S. and its international partners. Officials sent out the first batch of letters earlier this month to other nations informing them of new tariff rates, but those tariffs won't go into effect until Aug. 1, White House officials said. Sen. Chris Coons (D-Del.), who sits on the Small Business & Entrepreneurship Committee, may address the impact set to strike the country's business through the onset of levies during Sunday appearances on Fox News's 'Fox News Sunday' and NBC's 'Meet the Press.' This week, markets surged as Federal Reserve Chair Jerome Powell waved off criticism from the president on Thursday and corrected his projected costs for projects undertaken by the entity. The S&P 500 finished 0.4 percent up, and the Dow Jones Industrial Average finished up 208 points or 0.47 percent. Many await further direction from the Fed Chair on inflation as more permanent tariffs take effect and Americans begin to feel the jolt from its repercussions. Sen. Katie Britt (R-Ala.) of the Committee on Banking, Housing, and Urban Development could address how different business ventures may thrive or decline due to newer trade policies. All this and more will be discussed on this week's Sunday shows. Please see the full list of appearances below: NewsNation's 'The Hill Sunday:' Former Amb. John Bolton, Rep. Sean Casten (D-Ill.) and Former Gov. Chris Sununu (R-N.H.) ABC's 'This Week:' Sen. Lindsey Graham (R-S.C.); Rep. Hakeem Jeffries (D-N.Y.) CNN's 'State of the Union:' Sens. Katie Britt (R-Ala.) and Mark Warner, (D-Va.); Rep. Riley Moore ( CBS' 'Face the Nation:' Sen. Mark Warner (D-Va.); Rep. Michael McCaul, (R-Texas); International Atomic Energy Agency Director-General Rafael Mariano Grossi; former Food and Drug Administration Commissioner Scott Gottlieb NBC's 'Meet the Press:' Sens. Markwayne Mullin (R-Okla.), and Chris Murphy (D-Conn.); Zohran Mamdani, Democratic candidate for New York mayor

Photos: Hundreds in S.F. form human banner during ‘Families First' protest of Trump
Photos: Hundreds in S.F. form human banner during ‘Families First' protest of Trump

San Francisco Chronicle​

time3 minutes ago

  • San Francisco Chronicle​

Photos: Hundreds in S.F. form human banner during ‘Families First' protest of Trump

Hundreds of people gathered at San Francisco's Ocean Beach to form a human banner Saturday morning as part of a nationwide 'Families First' day of action against the Trump administration. As an upside-down American flag flapped in the misty San Francisco summer air, the protesters stood in straight single-file lines near the Cliff House, forming 'FAMILIA!' below letters spelling 'WE ARE.' Children, parents and grandparents, many accompanied by dogs, protested what organizers from Indivisible SF called 'cruel cuts and attacks on our families' by President Donald Trump, including changes to social programs, food stamps and school lunches, 'all so a handful of billionaires can get tax giveaways.' The protest took particular aim at Trump's One Big Beautiful Bill Act, the budget he recently signed into law, which cuts nearly $1 trillion from Medicaid over the next decade and is expected to mean millions of Americans will lose health coverage. Protesters also decried recent raids in the Bay Area and nationwide by Immigration and Customs Enforcement. As a ukulele band played Woody Guthrie's 'This Land is Your Land' over speakers, Peter Hosey, 40, stood in a line of people forming the letter 'A' in 'FAMILIA.' 'The message today is 'We are familia,'' Hosey said. 'That certainly resonates for a lot of us when you see what ICE has been doing, deporting children, deporting mothers, putting people in camps.' 'This is not what our country should be,' added Hosey, who works in the tech industry. The crowd, which organizers estimated as 600, then headed to the ocean, raising hands and waving to the water. Protesters then walked back and formed a circle around a large American flag as Sister Sledge's 1979 hit 'We Are Family' played over the speakers. Micki Morales, a retired schoolteacher who lives in Cupertino, was standing in one of the human letter lines when a call went out over the speakers. They needed someone who could sing 'This Land is Your Land.' Morales didn't come to the beach expecting to sing Saturday, but has experience in choruses and decided to offer up her voice. The song took on special meaning for her in the age of Trump. 'It's almost a prayer versus a statement,' said Morales, 88. 'I don't know how we got to this position, how people could be so fooled. But here we are, and hopefully we will dig our ways out.' Several related events were held around the Bay Area, including an afternoon rally at Snow Park in Oakland commemorating the anniversaries of the Americans with Disabilities Act, the Medicaid program and the Social Security Administration. The event featured speeches from Medi-Cal recipients, health care workers, caregivers and community members. One of the featured speakers in Oakland, Jazmine Arreola of the grassroots group Parent Voices Los Angeles, said she has fibromyalgia and is severely impacted by the federal cuts. 'How is it fair that families like mine up and down the state of California have lived our whole lives trying to move up and move forward for our kids, and we just can't?' Arreola, the mother of three children, said in a news release before the protest. 'My closest family members are on Medi-Cal: my dad and my grandparents. My daughter needs eye surgery. These cuts put our lives at risk.' In San Jose, health care workers, patients, community leaders and educators gathered Saturday afternoon at Discovery Meadow to highlight the effect of immigration raids and corporate tax breaks on working families. The Bay Area protests were organized by a coalition of unions, advocacy groups, faith leaders, and families. Events were also planned in San Mateo, Colma and Novato. The 'Families First' day of action included hundreds of rallies in all 50 states, highlighted by a livestreamed mobilization in Washington, D.C. The Washington demonstration included a 60-hour vigil at the National Mall to protest cuts to federal programs benefiting families. The events follow anti-Trump rallies that drew tens of thousands of people around the Bay Area and nationwide, including No Kings Day in June and 'Hands Off' in April. The San Francisco protest was organized by the same people who spelled out 'No King' on Ocean Beach during the nationwide No Kings protests this year. Several drones hovered overhead to capture their latest message. When it came to keeping the participants in orderly lines to spell their message clearly for the drones overhead, the job largely fell on Brad Newsham, 73. Newsham, a writer and former longtime cabdriver in the city, has been organizing protests like this one since 2007. Their causes have spanned the eras, from calls to impeach President George W. Bush, to support for Occupy Wall Street and now opposition to Trump. 'This is No. 28,' Newsham said. 'This has been incredible.' Newsham walked around the sand in a bright yellow jacket Saturday, delivering orders to the crowd via bullhorn. His injured ankle didn't hold him back. 'It's cool when you get a shot from the sky of all these people,' he said. When a group of protesters wearing purple union shirts bunched up in a line that was supposed to be single file, Newsham whipped them into shape. 'Hey SEIU, squeeze in!' he shouted into the bullhorn. 'It makes a better picture, you can do it.' Newsham seemed to get a kick out of it. 'It's an awesome responsibility,' he said. The demonstrators spelled out 'FAMILIA' to protest what Newsham's co-organizer, Travis Van Brasch, called ICE's 'completely illegal, cruel, stupid, unnecessary' raids. 'We are saying it in Spanish because that's where most of the trouble is,' said Van Brasch, 72. Warren Pederson contributed to this report.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store