Trump ‘not currently firing Fed Chair, but not ruling out'
Trump's mixed messaging, after months of escalating attacks on the independent central bank chief, sent the yield on the 30-year US Treasury bond surging above five per cent.
Asked about whether he would eject Powell, Trump said he is 'doing a lousy job but no, I'm not talking about that.'
'I don't rule out anything, but I think it's highly unlikely,' he added.
Trump noted that he would in any case be able to make a change at the top of the Fed when Powell's term ends next year.
'We'll pick somebody that's good,' Trump said. 'We want to see lower interest rates.'
Powell's term at the helm of the US central bank does not conclude until May 2026, and his term as a Fed governor is up at a later date.
The Fed chair has said that he did not plan to step down early, and considers the central bank's independence over monetary policy to be a matter of law.
A Supreme Court order recently suggested that Fed officials cannot be taken out of their jobs over policy disagreements, meaning they have to be removed 'for cause,' which could be interpreted to mean wrongdoing.
The US leader has repeatedly lashed out at Powell for not lowering interest rates more quickly, calling the central banker a 'numbskull' and 'moron' recently.
Late Tuesday, Trump suggested that a $2.5 billion renovation plan at the Fed could be sufficient cause to force Powell out. Asked by a reporter if the spending was a fireable offense, Trump said: 'I think it sort of is.'
The US leader on Wednesday floated the possibility of 'fraud' involved with the renovation, but provided no details substantiating the allegation.
The president has received political backing from his party for firing the Fed chair, US media reported Wednesday, noting that he told a room of Republican lawmakers that he would do so.
A White House official told CNBC: 'They expressed approval for firing him. The president indicated he likely will soon.'
The New York Times reported that Trump showed off a draft letter to oust Powell at his meeting with about a dozen House Republicans late Tuesday, although the president said Wednesday that he only 'talked about the concept' of removing Powell instead.
Trump added Wednesday that many people want the top job at the Fed, saying: 'I think it's one of the easiest jobs in government, you show up once a month and you make a statement about where the economy is going, and we're going to raise or lower interest rates.'
US House Speaker Mike Johnson on Wednesday said he believes it would be beneficial to have new leadership at the US Federal Reserve, although he's not sure the president has the authority to fire Chair Jerome Powell, according to media reports.
'I do I believe new leadership would be helpful at the Fed,' a Wall Street Journal reporter on X quoted Johnson as saying. Punchbowl News, in a separate X post, reported Johnson said he's 'really not sure' if the president can fire Powell.
Financial markets took a hit after reports about Trump's plans, although they recouped some losses after his later remarks.
The dollar initially fell by one percent against the euro before regaining ground, while safe haven asset gold logged gains.
Wall Street's main indexes stumbled, while the yield on the 30-year US bond surged on market worries.
The Dow Jones Industrial Average was flat while the broad-based S&P 500 Index and tech-focused Nasdaq both lost 0.1 per cent.
Meanwhile, gold prices jumped on Wednesday following news reports that US President Donald Trump planned to fire Federal Reserve Chair Jerome Powell, but trimmed gains after Trump denied the claim.
Trump said he was not planning to fire Powell, but declined to rule anything out, citing an investigation into cost overruns on a $2.5-billion Fed renovation project.
Spot gold rose 0.9% to $3,352.49 per ounce, as of 1233 pm after rising as much as 1.5% earlier.
US gold futures were up 0.7% at $3,360.80.
'Headlines suggesting Trump was considering firing Powell drove gold prices higher ... He later clarified it's highly unlikely. Gold markets were whipsawed by the back and forth,' said Daniel Ghali, commodity strategist at TD Securities. Israel launched powerful airstrikes in Damascus, damaging the Defence Ministry and striking near the presidential palace. The attack added to geopolitical worries and supported purchases of safe-haven gold. On the trade front, the European Commission prepared to target $84.1 billion worth of US goods for possible tariffs if trade talks with Washington fail after Trump threatened last week to impose 30% tariffs on imports from the EU.
Adding support to gold was data that showed US producer prices were unexpectedly unchanged in June from a 0.3% rise in May. It followed Tuesday's data that showed overall consumer prices rose 0.3% in June, up from 0.1% in May, signalling the Federal Reserve may continue to exercise caution before cutting interest rates.
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