
Why Trump's attacks on Jerome Powell are raising fears for the US economy
While Trump is not the first president to clash with the head of the US central bank on monetary policy, he has gone further than his predecessor by threatening to fire Powell and pressuring him to resign.
Trump's barbs have raised concerns about the prospect of the Fed losing its independence, which would have serious ramifications for the US economy.
What has Trump said about Powell?
Trump's main gripe with Powell has been the Fed's decision to keep its benchmark interest rate in the range of 4.25 to 4.50 percent.
The US central bank has resisted calls to lower the rate, which would spur economic growth by reducing borrowing costs across the economy, to keep a lid on inflation.
While inflation remains modest at present, Powell and his colleagues fear that prices could rise significantly in the coming weeks and months due to Trump's tariffs.
Trump has argued that the rate should be as low as 1 percent.
Trump has been at odds with Powell since his first term, when he nominated him to the top job, but the president began ramping up his attacks in April, when he branded the monetary policy chief 'a major loser' and 'numbskull' whose 'termination cannot come fast enough'.
Since then, Trump has made conflicting remarks about whether he intends to fire Powell, and last week asked a group of Republican lawmakers for their opinion on the matter.
While Trump continues to blast Powell on social media, other top White House officials have joined the condemnation.
Earlier this month, Office of Management and Budget Director Russell Vought accused Powell of mishandling the 'ostentatious' $2.5bn refurbishment of the Fed's headquarters in Washington, DC.
On Tuesday, US Treasury Secretary Scott Bessent accused the Fed of 'persistent mandate creep into areas beyond its core mission' and called for a review of the renovation project.
Today in a CNBC interview, I called for a review of the Federal Reserve. It is my belief that the central bank should conduct an exhaustive internal review of its non-monetary policy operations. Significant mission creep and institutional growth have taken the Fed into areas that…
— Treasury Secretary Scott Bessent (@SecScottBessent) July 21, 2025
Does Trump have the power to remove Powell?
The Fed chair is harder to remove than the heads of other independent government agencies.
Under the Federal Reserve Act of 1913, the president may remove the head of the central bank 'for cause' – widely interpreted to mean proof of corruption or malfeasance.
A landmark 1935 Supreme Court ruling further insulated the Fed from political pressure by explicitly stating that the heads of independent agencies cannot be removed without cause.
David Wilcox, a senior fellow at the Peterson Institute for International Economics who served on the staff of the Federal Reserve Board, said the Trump Administration appeared to be zoning in on the Fed's renovation project to create a pretext to fire Powell.
'The way they're doing that is they're drumming up a lot of controversy around the expenses that have been incurred and will be incurred in the renovation of two of the historic buildings,' Wilcox told Al Jazeera.
'The drumbeat of criticism seems to be that Powell allegedly has mishandled this situation, and concern is that this very small-scale situation might be somehow blown up into an excuse for firing Powell 'for cause'.'
Is there any precedent for Trump's campaign against Powell?
In the late 1960s and early 1970s, presidents Lyndon B Johnson and Richard Nixon – a Democrat and a Republican – both famously exerted pressure on the Fed chair to keep interest rates low.
Some historians have theorised that Nixon's cajoling of then-Fed chair Arthur Burns stopped him from rolling out rate hikes that could have halted the emergence of double-digit inflation in the mid-1970s.
'What does compromising central bank independence do? It runs the possibility of giving some kind of short-term gain for long-term pain,' Mark Spindel, the CIO of Potomac River Capital and a Federal Reserve historian, told Al Jazeera.
'And politicians have short memories.'
How will markets react if Powell is removed?
Suggestions that Trump could remove Powell have roiled markets on several occasions.
On Wednesday, the benchmark US S&P 500 briefly fell by 0.7 percent, and the US dollar sank 0.9 percent, following reports that Trump had asked Republican lawmakers whether he should fire the Fed chair.
Stocks recovered a short time later after Trump denied that he had any plans to remove Powell, the latest example of what investors have dubbed the 'TACO Trade' – short for 'Trump Always Chickens Out'.
If Trump were to follow through on his threat to remove Powell, the stock market and confidence in the US economy would take a major hit, Wilcox said.
'It would probably be reflected in an increase in the expected inflation that's built into borrowing rates. It would be reflected in an increase in the risk premiums that are built into long-term Treasury rates,' he added.
'It would probably be reflected in a weakening of the US dollar because of a loss in confidence that would follow from the knocking down of yet one more signature aspect [of the economy] that has been taken for granted for many decades.'
Why might Trump not want to fire Powell?
Fed historian Spindel said Trump may ultimately decide to keep Powell despite his threats.
The Fed chairman's term expires in May next year, Spindel said, and, until then, Trump can use Powell as a scapegoat for any problems with the economy.
As a businessman, Trump also considers the stock market an important barometer of success, Spindel added.
'The market is an important governor on his policies,' he said.
'He has a large constituency in the corporate sector. He obviously enjoys support from the middle and upper wealthy class, and he doesn't want to torpedo the equity market.'
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Qatar Tribune
2 minutes ago
- Qatar Tribune
Donald Trump, Powell clash over renovation costs during tense Fed visit
Agencies After months of sharp criticism, President Donald Trump took his feud with Federal Reserve Chair Jerome Powell to the Fed's front door on Thursday, publicly rebuking him over the escalating costs of a long-planned building project. Powell pushed back, disputing the president's latest price tag as incorrect. Wearing hard hats and grim faces, standing in the middle of the construction project, Trump and Powell addressed the cameras. Trump charged that the renovation would cost $3.1 billion, much higher than the Fed's $2.5 billion figure. Powell, standing next to him, shook his head. The Fed chair, after looking at a paper presented to him by Trump, said the president was including the cost of renovating a separate Fed building, known as the Martin building, which was finished five years visit represented a significant ratcheting up of the president's pressure on Powell to lower borrowing costs, which Trump says would accelerate economic growth and reduce the government's borrowing costs. Presidents rarely visit the Fed's offices, though they are just a few blocks from the White House, an example of the central bank's independence from day-to-day politics. 'We have to get the interest rates down,' Trump said later after a short tour, addressing the cameras this time without Powell. 'People are pretty much unable to buy houses.' Trump is likely to be disappointed next week, however, when Fed officials will meet to decide its next steps on interest rates. Powell and other officials have signaled they will likely keep their key rate unchanged at about 4.3%. However, economists and Wall Street investors expect the Fed may start cutting rates in September. Trump did step back a bit from some of his recent threats to fire Powell before his term ends May 26. Asked if the rising costs of the Fed's renovation, estimated in 2022 to cost $1.9 billion, was a 'fireable offense,' Trump said, 'I don't want to put this in that category.' 'To do that is a big move, and I don't think that's necessary,' Trump added. 'I just want to see one thing happen, very simple: Interest rates come down.' The Fed allowed reporters to tour the building before the visit by Trump, who, in his real estate career, has bragged about his lavish spending on architectural accoutrements that gave a Versailles-like golden flair to his buildings. On Thursday, reporters wound through cement mixers, front loaders, and plastic pipes as they got a close-up view of the active construction site that encompasses the Fed's historic headquarters, known as the Marriner S. Eccles building, and a second building across 20th Street in Washington. Fed staff, who declined to be identified, said that greater security requirements, rising materials costs and tariffs, and the need to comply with historic preservation measures drove up the cost of the project, which was budgeted in 2022 at $1.9 billion. The staff pointed out new blast-resistant windows and seismic walls that were needed to comply with modern building codes and security standards set out by the Department of Homeland Security. The Fed has to build with the highest level of security in mind, Fed staff said, including something called 'progressive collapse,' in which only parts of the building would fall if hit with explosives. Sensitivity to the president's pending visit among Fed staff was high during the tour. Reporters were ushered into a small room outside the Fed's boardroom, where 19 officials meet eight times a year to decide whether to change short-term interest rates. The room, which will have a security booth, is oval-shaped, and someone had written 'oval office' on plywood walls. The Fed staff downplayed the inscription as a joke. When reporters returned to the room later, it had been painted over. During the tour, Fed staff also showed the elevator shaft that congressional critics have said is for 'VIPs' only. Powell has since said it will be open to all Fed renovation includes an 18-inch (45-cm) extension so the elevator reaches a slightly elevated area that is now accessible only by steps or a ramp. A planning document that said the elevator will only be for the Fed's seven governors was erroneous and later amended, staff said. Plans for the renovation were first approved by the Fed's governing board in 2017. The project then wended its way through several local commissions for approval, at least one of which, the Commission for Fine Arts, included several Trump appointees. The commission pushed for more marble in the second of the two buildings the Fed is renovating, known as 1951 Constitution Avenue, specifically in a mostly glass extension that some of Trump's appointees derided as a 'glass box.' Fed staff also said tariffs and inflationary increases in building material prices drove up costs. Trump in 2018 imposed a 25% duty on steel and 10% on aluminum. He increased them this year to 50%. Steel prices are up about 60% since the plans were approved, while construction materials costs overall are up about 50%, according to government data. Fed staff also pointed to the complication of historic renovations – both buildings have significant preservation needs. Constructing a new building on an empty site would have been cheaper, they said. As one example, the staff pointed reporters to where they had excavated beneath the Eccles building to add a floor of mechanical rooms, storage space, and some offices. The Fed staff acknowledged such structural additions underground are expensive, but said it was done to avoid adding HVAC equipment and other mechanics on the roof, which is historic. The Fed has previously attributed much of the project's cost to underground construction. It is also adding three underground levels of parking for its second building. Initially the central bank proposed building more above ground, but ran into Washington, D.C.'s height restrictions, forcing more underground construction.


Al Jazeera
3 hours ago
- Al Jazeera
‘Horrors upon horrors': How US Congress responded to mass hunger in Gaza
Washington, DC – The images of emaciated children coming out of Gaza have moved some of Israel's staunchest supporters in the United States Congress to decry the humanitarian situation in the besieged Palestinian territory ravaged by Israeli-imposed starvation. Some Democratic lawmakers pointedly condemned Israel over the past few days, slamming the US and Israeli-backed GHF food distribution mechanism that has led to the killing of more than 1,000 Palestinian aid seekers. But others issued vague statements calling for aid to enter Gaza without directly blaming Israeli policies. 'This is the reality: Having already killed or wounded 200,000 Palestinians, mostly women and children, the extremist Israeli government is using mass starvation to engineer the ethnic cleansing of Gaza,' progressive Senator Bernie Sanders said in a statement late on Friday. He accused the government of Israeli Prime Minister Benjamin Netanyahu of carrying out an 'extermination' campaign in Gaza. The anger threatens to shake the strong bipartisan support that Israel has enjoyed for decades in Congress, which authorises the billions in military aid that the staunch US ally receives from Washington annually. But so far, there does not appear to be a significant push to impose actual consequences on the Israeli government for its forced mass hunger campaign in Gaza. Just last week, the US House of Representatives voted overwhelmingly to approve $500m in missile defence support to Israel. 'This cannot continue' On Saturday, Democratic Senator Chris Van Hollen hit out at Netanyahu and US President Trump for replacing humanitarian aid groups in Gaza 'with mercenaries – leading to more death and devastation'. 'Every day, the horrors in Gaza reach new, unimaginable depths,' Van Hollen wrote in a social media post. The Trump administration has been talking up US support for the GHF operation – which the United Nations and rights groups have described as a 'death trap' and 'human slaughterhouses' – and falsely blaming Hamas for the humanitarian crisis in Gaza. 'This cannot continue,' Van Hollen said. Congressman John Garamendi suggested that Israel's 'dangerous and wilful failure to enable humanitarian aid' in Gaza amounts to genocide. Only a handful of progressive congressmembers have accused Israel of genocide in Gaza, of an effort to destroy the Palestinian people. But leading rights groups and UN experts have concluded that the Israeli military campaign is genocidal. 'Israel has the ability and the means to deliver adequate food to the Palestinians,' Garamendi said in a statement. 'They also have the obligation under international law to deliver it; it's the choice of Prime Minister Netanyahu not to feed Gaza.' It must end. My statement on the starvation crisis in Gaza. — John Garamendi (@RepGaramendi) July 26, 2025 Numerous Israeli officials have publicly said that they aim to cut off aid to Gaza and force all Palestinians to leave the territory, effectively promoting ethic cleansing. Many have suggested that there are no innocent people in the enclave. Earlier this week, Israeli Heritage Minister Amichai Eliyahu appeared to confirm that his country is purposely starving Gaza, saying that 'there is no nation that feeds its enemies.' 'The government is racing ahead for Gaza to be wiped out,' Eliyahu said in a radio interview, according to The Times of Israel. According to Gaza's health authorities, at least 127 Palestinians have died of malnutrition in the enclave, including five on Saturday. On Thursday, Congressman Wesley Bell – who was backed with millions of dollars from pro-Israel groups last year to defeat former Congresswoman Cori Bush, a leading critic of Israeli policies – spoke out against Israel's actions. 'I've always supported Israel's right to exist and defend itself. That hasn't changed,' Bell said in a social media post. 'But supporting this government's actions – allowing children to starve and firing on civilians seeking food – is something I can't stand by. This isn't self-defense. It must stop.' Congresswoman Summer Lee also said on Friday that Israel is blocking humanitarian assistance to Gaza while shooting at aid seekers looking to receive food from GHF sites. 'People are collapsing in the streets from extreme starvation. Horrors upon horrors,' Lee said in a social media post. 'The US must stop funding Israel's manufactured famine and genocide.' Vague statements Not all US lawmakers who spoke on the issue were as forceful as Lee when addressing the crisis. Many failed to point the finger at Israel, while others prefaced their mild criticism of the US ally with customary condemnation of Hamas. Several congressmembers reiterated the Israeli lie that Hamas steals UN humanitarian aid – a claim that has been denied by UN agencies and aid groups on the ground, and for which the Israeli military officials acknowledge they have no evidence. Congresswoman Grace Meng said in a statement that 'as a mother', her heart breaks to see children in Gaza starve, but she proceeded to repeat pro-Israel talking points about the humanitarian situation. 'It is important to recognize that Israel has facilitated the entry of over 1.8 million tons and over 96,000 trucks into Gaza, while Hamas continues to hold hostages, extort the aid system, and refuse ceasefire deals to stay in power and prolong the war,' Meng said in a statement. My full statement on the humanitarian crisis and the urgent need for peace in Gaza👇 — Grace Meng (@RepGraceMeng) July 25, 2025 Throughout more than 22 months of war, Israel has allowed a trickle of aid to enter Gaza – but far below the needs of the population. And since March, Israel has tightened its blockade on the territory, making the deadly GHF sites nearly the only source of food for Palestinians. Hamas also denies rejecting ceasefire deals. Instead, the group says it is seeking a permanent end to the war, while several Israeli officials have said that Israel will proceed with its military campaign in Gaza even if a short-term truce is reached. Congressman Adam Smith called on Israel to take the 'steps necessary to alleviate the humanitarian catastrophe' in Gaza, but he focused his criticism on Hamas, echoing unfounded Israeli arguments about the group blocking ceasefire deals and stealing the aid. 'I believe we can both continue to support Israel in their effort to defend themselves against Hamas, Iran and others in the region who continue in their efforts to attack and destroy Israel, and work immediately to relieve the suffering of the people in Gaza,' Smith said in a statement. Similarly, Senator Cory Booker released a 172-word statement on the starvation crisis in Gaza that mentioned the word 'Israel' only once – in calling for a strategy to 'strengthen Israel's security.' 'It is our collective moral duty to ensure that humanitarian relief reaches those who need it most urgently,' Booker said in a statement. Criticising Trump At the same time, some Democrats invoked the crisis to rebuke Trump – their political rival – without denouncing Israel. House Minority Leader Hakeem Jeffries set the tone for that approach with a statement late on Friday that focused on Trump but failed to explicitly criticise Israel. 'The starvation and death of Palestinian children and civilians in an ongoing war zone is unacceptable,' Jeffries said. 'The Trump administration has the ability to bring an end to this humanitarian crisis. They must act now.' Statement on the Humanitarian Crisis in Gaza. — Hakeem Jeffries (@RepJeffries) July 26, 2025 For his part, Congressman Tim Kennedy underscored that Trump has failed to deliver his promise of ending the war on Gaza. 'His strategic and moral failure has led to deteriorating conditions, with new reports and images of mass starvation of Palestinians,' Kennedy said in a statement. Trump's Republican Party has been largely silent about the worsening hunger in Gaza. But Congressman Randy Fine – a close ally of the US president – appeared to at once endorse Israel's starvation campaign in Gaza while dismissing it as 'Muslim terror propaganda'. 'Release the hostages,' he wrote in a social media post earlier this week. 'Until then, starve away.'


Al Jazeera
4 hours ago
- Al Jazeera
Trump wades in on Thailand-Cambodia fighting during golf visit in Scotland
United States President Donald Trump says he has spoken with the leaders of Cambodia and Thailand in a bid to end their border fighting, on the second day of his golfing trip in Scotland, where he owns and is promoting two courses. 'Just spoke to the Prime Minister of Cambodia relative to stopping the War with Thailand,' said Trump in a post on his Truth Social network on Saturday. Trump, who was playing at his Turnberry resort with son Eric and US ambassador to the UK Warren Stephens, said soon after in a new post, 'I have just spoken to the Acting Prime Minister of Thailand, and it was a very good conversation.' On Saturday, the death toll on both sides stood at 32, with more than 130 injured. Trump's announcement came as clashes, now in their third day, continued in the countries' coastal regions where they meet on the Gulf of Thailand, about 250 kilometres (160 miles) southwest of the main front lines. Tensions flared over long-contested ancient temple sites before fighting spread along the countries' rural border region, marked by a ridge of hills surrounded by wild jungle and agricultural land where locals farm rubber and rice. The decades-old conflict between Thailand and Cambodia, centred around a contested section of their shared border, re-erupted on Thursday after a landmine explosion along the border wounded five Thai soldiers. 'Thailand, like Cambodia, wants to have an immediate Ceasefire, and PEACE,' said Trump on Saturday. 'I am now going to relay that message back to the Prime Minister of Cambodia. After speaking to both Parties, Ceasefire, Peace, and Prosperity seems to be a natural. We will soon see!' Trump also indicated he would not move forward on trade deals with either nation until fighting has stopped. 'Even though he has Scottish roots, he's a disgrace' Trump's visit to Scotland, where his late mother hailed from, has met protests, both at the golf course where he is playing and elsewhere around the UK. Hundreds of demonstrators gathered on Saturday in front of the US Consulate in the capital Edinburgh. Speakers told the crowd that Trump was not welcome and criticised British Prime Minister Keir Starmer for striking a recent trade deal to avoid stiff US tariffs on goods imported from the UK. 'The vast majority of Scots have this sort of feeling about Trump that, even though he has Scottish roots, he's a disgrace,' said Mark Gorman, 63. Gorman, who works in advertising, said he came out 'because I have deep disdain for Donald Trump and everything that he stands for.' Protests also took place in other cities as environmental activists, opponents of Israel's war on Gaza, staunchly supported by the Trump administration, and pro-Ukraine groups loosely formed a 'Stop Trump Coalition'. 'I think there are far too many countries that are feeling the pressure of Trump and that they feel that they have to accept him and we should not accept him here,' said June Osbourne, 52, a photographer and photo historian. 'I don't think I could just stand by and not do anything,' said Amy White, 15, of Edinburgh, who attended with her parents. She held a cardboard sign that said 'We don't negotiate with fascists.' Other demonstrators held signs of pictures with Trump and Jeffrey Epstein as the feeding frenzy in the US media, and backlash from his MAGA base, over files in the case has increasingly frustrated the president. At a protest Saturday in Aberdeen, Scottish Parliament member Maggie Chapman told the crowd of hundreds: 'We stand in solidarity, not only against Trump but against everything he and his politics stand for.' While golf is the main purpose of his trip, Trump also plans to talk trade with Starmer and Ursula von der Leyen, the European Commission president. The Trump family will also visit another one of their courses near Aberdeen in northeastern Scotland, before returning to Washington on Tuesday.