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Forbes
24-07-2025
- Business
- Forbes
Five Reasons Trump Should Think Twice About Firing Fed Chair Powell
WASHINGTON, DC - NOVEMBER 02: (L to R) U.S. President Donald Trump walks with his nominee for the ... More chairman of the Federal Reserve Jerome Powell on their way to a press event in the Rose Garden at the White House, November 2, 2017 in Washington, DC. (Photo by) It's no secret that Donald Trump does not like how Jerome Powell is managing the Fed and monetary policy. Despite nominating Powell for the job of Fed Chair in 2017, the President lambasts Powell (who Trump has nicknamed Mr. Too Late) every time the Fed's Federal Open Markets Committee meets and doesn't cut interest rates. But President Trump should think again if he thinks getting rid of Powell will get him what he wants. While the President is desperate for the Fed to cut interest rates, firing Powell before his term ends in eight months is no guarantee that rates would drop, and his departure would also likely rattle the financial markets. Below are the top five reasons why it's in the President's interest to let Powell finish his term as Fed Chair: 5. The President will probably lose the case in court. Section 10 of the Federal Reserve Act, states the president can remove any member of the Fed's Board of Governors 'for cause,' such as neglect of duty, corruption, or inefficiency. But the head of the Fed cannot be removed for policy differences such as when to cut the Federal Funds Rate. This is why the Department of Justice is pushing forward with the investigation into the renovations of the Federal Reserve's headquarters and whether it has been mismanaged. But Powell would likely fight any attempt to remove him, and without strong evidence of fraud, the court would either dismiss, or issue an injunction. This could allow Powell to stay on the job until his term ends in May of 2026. 4. If Powell is fired a Biden appointee will take over the Fed, temporarily. If the courts don't block the President from firing Powell, then Fed Vice Chair Philip Jefferson would become responsible for running the central bank until the Senate confirmed a new one. Jefferson was appointed by former President Joe Biden in 2022, and as acting Fed Chair would likely stay the course on interest rates assuming no major changes in economic conditions. Jefferson would also be in charge of other policy matters, regulating banks, and the management of the Fed offices and staff. 3. The markets will react negatively. The stock market has been on a roller roaster ride since Trump re-entered office on January 20th. After steep losses in the first quarter of 2025, the market has largely recovered in response to the President's retreat from his Liberation Day tariffs. But firing Powell would likely set the markets into a tailspin again. Poll after poll has shown that the financial sector doesn't want Trump to push Powell out. And leading bankers have been offering Powell support and warning of a market backlash should he be dismissed. Trump loves to cite a bullish market a sign he is managing the economy well. He would likely lose that message if he fires Powell. 2. Powell is historically good at his job. Since 1954, the Federal Reserve Board's policy-making Federal Open Market Committee (FOMC) has raised interest rates in a series of recurring steps 13 times. In five of them, the Fed has done this without putting the U.S. economy into a tailspin (soft landing), including twice under the leadership of Powell. No other Fed Chair has achieved this feat more than once. Furthermore, Powell and the Fed's steady hand have countered the market anxiety created by the President's aggressive trade policy. 1. Trump will lose his favorite economic scapegoat. Many economists continue to predict that the U.S. economy will slow down given a number of headwinds: the President's push for higher tariffs; layoffs of federal employees and contractors (135,000 firings and early retirements of federal employees, and tens of thousands of contractors to date); and the flood of additional federal debt created by the recently enacted Big Beautiful Bill (BBB). Economic growth and job creation has slowed since Trump took office, with GDP contracting .5% in the first quarter of 2025. And there are some signs that inflation is starting to bubble up. Firing Powell would make it difficult to use him as a scapegoat should the economy go belly up.
Forbes
18-06-2025
- Business
- Forbes
Here's Why The Fed Likely Won't Cut Rates—Even As Trump Attacks Powell
President Donald Trump escalated his aggressive push for interest rate cuts Wednesday as the Federal Reserve held its meeting on the matter, and all evidence suggests it's highly unlikely this week will produce the rate cuts the Oval Office desires, though it will reveal how the top U.S. monetary policymakers are approaching the U.S. economy as tariffs play out. Federal Reserve Chair Jerome Powell will take center stage again this week. In his latest attack on the Fed and its top-ranking official Jerome Powell, Trump derided Powell as a 'stupid person' because he 'probably won't cut today.' The name calling came just before the Fed says at 2 p.m. EDT Wednesday whether it decided to change interest rates, to be followed by Powell's press conference. The decision will follow Tuesday and Wednesday's regularly scheduled meeting of the Federal Open Markets Committee, the 12-person committee that most crucially sets the target federal funds rate baseline for borrowing throughout the U.S. economy. Wall Street considers it a near certainty the Fed will opt to keep rates at the 4.25% to 4.5% range they've stood since December. The CME Group's FedWatch Tool indicates markets price in just 0.1% odds of a cut this week – despite Trump's repeated demands for the Fed to slash rates by a full percentage point. Recent economic data seems to satisfy the normal rate cut preconditions of steady inflation and a weakening labor market, but the Fed has been hesitant to take action as it normally may, citing the uncertain impact of Trump's tariffs. To that end, Goldman Sachs economists expect inflation to rise from its most recent 2.5% to 3.3% by December, according to the Fed's preferred inflation measure of core personal consumption expenditures. Goldman expects the dot plot to also reveal the Fed expects to see higher unemployment (four-year high of 4.5%) and lower economic growth (1.3% real gross domestic product growth), though the investment bank does expect the Fed to stand by its projection of two 2025 cuts. Wednesday marked the latest in a long string of attacks on Powell. The monetary policy chief has been among the most frequent targets of Trump's ire during the first five months of his second presidential term. Trump has repeatedly gone after the central banker as the Fed declines to cut rates to Trump's liking. Trump called Powell a 'numbskull' last week, and has frequently teased the possibility of firing Powell before his term expires next May. Beyond any potential fireworks from Powell amid the Trump barrage directed at him, the most critical update from this week's Fed conclave will be the release of its quarterly summary of economic projections, or dot plot. That will reveal where Fed staff expect several key economic data points to head in the near future, notably indicating the median expectation for rate cuts from the policymakers who vote on conducting them. The March dot plot indicated the Fed's baseline forecast was for two 25 basis-point cuts this year, but this month's update will reveal just one expected cut in 2025, according to Bank of America forecasts. Fed meetings often bring significant movements in stock prices, and the stakes are set this week for a potential move. Generally, stocks tend to rise when the Fed indicates rates will go lower and fall on the reverse, as public companies fetch higher valuations on stronger profit margins from lower borrowing costs and stocks becoming more attractive for investors as fixed income returns shrink. If the Fed adjusts its dot plot to indicate just one 2025 cut, that would cause a noticeable selloff in stocks, according to Sevens Report founder Tom Essaye, predicting a roughly 1% drop for the S&P 500 benchmark index. Should the Fed maintain its median forecast of two cuts, Essaye said he expects a mild rally, though that could expand into a sizable gain if Powell shows openness to lowering rates at the July meeting. The FedWatch Tool shows just a 13% chance of a cut at the July 29-30 summit.
Khaleej Times
19-03-2025
- Business
- Khaleej Times
UAE Central Bank maintains rates, following US move
The UAE Central Bank on Wednesday decided to maintain the base rate applicable to the overnight deposit facility (ODF) at 4.40 per cent. The UAE's decision follows that of the US Federal Reserve, which decided to hold its interest rates. The UAE follows US monetary policy as the UAE dirham is pegged to the US dollar. In a statement, the Federal Open Markets Committee decided to maintain the target range for the federal funds rate at 4.25 to 4.5 per cent. This was the third month in a row that the rates have remained the same.
