Latest news with #JeromePowell
Yahoo
3 hours ago
- Business
- Yahoo
Trump tells GOP lawmakers he will likely fire Powell ‘soon'
President Trump indicated to Republican lawmakers that he plans to fire Federal Reserve Chair Jerome Powell, a senior White House official told The Hill. The suggestion came during an Oval Office meeting Tuesday evening with a group of 11 hard-line House Republicans who revolted on the floor earlier in the day over concerns with a trio of cryptocurrency bills. 'The President asked lawmakers how they felt about firing the Fed Chair. They expressed approval for firing him. The President indicated he likely will soon,' the official said. A second source familiar with the matter confirmed that sequence of conversation. Asked about the reports emerging on Trump's thinking, the president in the Oval Office said it was 'not true' and walked back some of his sentiments in which he's teased firing Powell previously. 'I don't rule out anything but I think it's highly unlikely. Unless he has to leave, fraud,' Trump told reporters. The president was also pressed on if he has drafted a letter to fire Powell, which he said he has not. Markets dipped Wednesday as news reports emerged that Trump is moving closer to firing the Fed chair, with the S&P 500 falling into the red, CNBC reported. Trump has for months raged against Powell over the Fed's decision not to lower interest rates, a decision the chair has attributed to uncertainty around the president's aggressive use of tariffs. Top White House officials have in recent days shifted their focus to the cost of the Fed's renovations and Powell's testimony about it, raising questions about whether the president and his allies may try to oust Powell for cause before his term as chair expires next May. 'I think he's terrible. I think he's a total stiff. But the one thing I didn't see him is a guy that needed a palace to live in,' Trump told reporters Tuesday in Pennsylvania when asked if he would fire Powell. Asked if spending $2.5 billion on renovations to the Fed's Washington, D.C., headquarters is a fireable offense, Trump replied, 'I think it sort of is.' Any effort to remove Powell may face legal challenges. It's not clear the president has the authority to fire the Fed chair without cause, and Powell has repeatedly indicated he will not step down before his term ends. Updated 12:25 p.m. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Yahoo
3 hours ago
- Business
- Yahoo
A disaster for working Americans: Trump's attacks on Fed chair Jerome Powell risk tanking the dollar
Donald Trump's attacks on Federal Reserve Chair Jerome Powell threaten far more than one man's job—they endanger the entire U.S. and global economy. The Fed was intentionally designed to operate independently of political pressure, with a core mission to stabilize prices and support employment. Undermining that independence for the sake of one man's political agenda won't just spark academic debate—it will raise your mortgage, inflate your grocery bill, and destabilize financial mark
Yahoo
5 hours ago
- Business
- Yahoo
Trump will be hit with $60bn bill if he sacks Powell
Donald Trump will be hit with a $60bn (£44bn) bill if he follows through on his threats to sack Federal Reserve chairman Jerome Powell, analysts have warned. Ousting Mr Powell, the head of the US central bank, would send Treasury yields soaring, adding crippling costs to the government's debt interest bill as investors bet on the prospect of higher inflation and political instability. Gennadiy Goldberg, the head of US rates strategy at TD Securities, said that if Mr Trump did oust the Fed Chair, it would add around $58bn to the government's interest bills. The president suggested this week that he could sack Mr Powell over escalating costs in the $2.5bn renovation of the central bank. After a flurry of reports warned that Mr Trump was preparing to oust the Fed chairman imminently on Wednesday, the president told reporters: 'I don't rule out anything but I think it's highly unlikely unless he has to leave for fraud.' Mr Trump has been deeply critical of Mr Powell, who he has called a 'numbskull' for not cutting interest rates as the president wants. If Mr Trump were to remove the Fed chairman, analysts warned bond investors would demand far higher rates to compensate for fears that the Fed would no longer operate free from government interference and would be less able to keep inflation under control. Mr Goldberg said this would drive up yields on American debt repayable in 20 years and 30 years by between 20 and 50 percentage points, potentially pushing interest rates on these bonds to around 5.5pc. In turn, this would add $58bn to the interest bill on the $276bn in 30-year Treasuries and $168bn in 20-year Treasuries that the US issues in a typical fiscal year, Mr Goldberg estimated. This calculation assumes that yields stay at these levels and that government debt issuance patterns remain the same. 'If interest rates jump, the debt burden could very quickly become unsustainable,' said Mr Goldberg. Alex Everett, a fund manager at Aberdeen, said that over the course of two or three months, the shock could add as much as a whole percentage point to 30-year Treasury yields, pushing the interest rate on these bonds to 6pc. This would be the steepest rise in US Treasury yields since the 'Volcker shock' in the early 1980s when Paul Volcker, the then-Fed chairman, made large increases in interest rates to tame runaway inflation. Mr Everett said: 'The difference then was that yields moved higher to reflect a Fed combating inflation. This time they'd likely be moving higher to reflect a Fed not combating inflation effectively. '[Markets will think] inflation will not be kept under control by an institution that exists to moderate the economy.' Sacking a Fed chairman would also push markets to make bets on more political instability and unchecked borrowing. 'It would be a very key progression point in Trump's agenda, you'd assume the next logical step is that he can push harder on other things,' Mr Everett said. The surge in Treasury yields would be accompanied with a significant drop in the dollar that would hit investors hard, he added. Higher borrowing costs would hit at a time when the government's debt interest bill was already forecast to soar from 3.2pc to 6.1pc by 2054, assuming the measures in Mr Trump's spending bill come to pass, according to analysis by the Committee for a Responsible Federal Budget. Higher Treasury yields would also drive up mortgage rates, which are currently close to 7pc, further slowing housing market activity, at a time when sales are already at a 30-year low. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
Yahoo
5 hours ago
- Business
- Yahoo
Powell once said he couldn't imagine leaving the Fed early—other than dying. ‘You will not see me getting in the lifeboat'
As President Donald Trump continues to put pressure on Federal Reserve Chairman Jerome Powell, an earlier standoff between the two men could offer clues on how their current one might play out. In 2019, like today, Trump demanded the central bank hurry up and cut rates, raising questions about Powell's future as Fed chief and whether he would step down. Federal Reserve Chairman Jerome Powell signaled in 2019 that he would rather go down with the ship than save his own skin and compromise the independence of the central bank. As President Donald Trump continues to put pressure on Powell, an earlier standoff between the two men could offer clues on how their current one might play out. In 2019, like today, Trump demanded the Fed hurry up and cut rates amid a trade war he had launched, raising questions about Powell's future as Fed chief and whether he would step down. During a House Financial Services Committee hearing in July of that year, Powell was asked by then-Chairwoman Maxine Waters, 'If you get a call from the president today or tomorrow and he said 'I'm firing you. Pack up and it's time to go.' What would you do?' 'Of course I would not do that,' Powell replied. 'I can't hear you,' Waters said, prompting laughter in the chamber. 'The answer would be 'no,'' Powell reiterated. 'You think the president doesn't have the authority. Is that why you would not leave?' Waters asked. 'The law clearly gives me a four-year term, and I fully intend to serve it,' Powell said. According to the 2022 book Trillion Dollar Triage by Wall Street Journal reporter Nick Timiraos, he was even more adamant in private about not stepping down early. 'I will never, ever, ever leave this job voluntarily until my term ends under any circumstances. None whatsoever. You will not see me getting in the lifeboat,' Powell told a reporter that spring. 'It doesn't occur to me in the slightest that there would be any situation in which I would not complete my term other than dying.' For Powell, who was first appointed Fed chief by Trump, the top priority was to ensure the U.S. economy continued to expand but also to preserve the Fed as an institution, including its independence, according to the book. Weeks after that House hearing, the Fed lowered rates a quarter point, but Trump kept haranguing and insulting Powell, calling for even more easing. Given that history, Powell's tenure became an issue again after Trump was re-elected. In November, Powell was asked whether he would step down if asked by Trump. He replied no, adding later that it's 'not permitted under the law' for the president to fire or demote him or any other Fed governors in leadership positions. Months later, Trump imposed sweeping tariffs across U.S. trading parters, raising fears of stagflation—weak economic growth coupled with high inflation. While inflation hasn't spiked yet and growth remains intact, the Fed has held off on lowering rates, drawing the ire of Trump. On Wednesday, Trump said it was 'highly unlikely' that he would fire Powell, while confirming that he had discussed the 'concept' of dismissing him with House Republicans during a White House meeting Tuesday night. Still, Trump and other White House officials have continued to attack Powell over renovations at the Fed's headquarters, accusing him of mismanagement. Democratic Sen. Elizabeth Warren, a longtime critic of Powell, suggested the renovation issue was 'a pretext to get him fired.' Meanwhile, JPMorgan CEO Jamie Dimon and other chiefs at top banks said this past week that central bank independence is crucial to the economy and financial markets. Powell's term as chairman of the board of governors expires in May 2026, but his term as a governor extends to January 2028. That means he would still be eligible to serve as chairman of the rate-setting Federal Open Market Committee, if he chooses to stick around as governor. Historically, the board chair has also been FOMC chair, but the law allows the FOMC to determine its own internal organization. So it's possible one person could serve as Fed board chair, and a different person could serve as FOMC chair. On Tuesday, Treasury Secretary Scott Bessent said moves to replace Powell are under way and suggested that he should consider stepping down from the Fed entirely once his chairmanship ends. 'Traditionally, the Fed chair also steps down as a governor,' he told Bloomberg. 'There's been a lot of talk of a shadow Fed chair causing confusion in advance of his or her nomination. And I can tell you, I think it'd be very confusing for the market for a former Fed chair to stay on also.' This story was originally featured on
CNN
6 hours ago
- Business
- CNN
Powell is costing the US by not lowering rates, says Trump. Here's what he may mean
Source: CNN As part of his campaign to get rid of Jerome Powell, President Donald Trump has blamed the Federal Reserve chair for costing the country 'hundreds of billions of dollars' by not slashing interest rates. 'You have cost the USA a fortune and continue to do so,' Trump wrote in a handwritten note to Powell that he posted on Truth Social last month. 'You should lower that rate by a lot. Hundreds of billions of dollars are being lost.' In the same post, Trump blamed the Fed board, saying, 'If they were doing their job properly, our Country would be saving Trillions of Dollars in Interest Cost … We should be paying 1% Interest, or better!' Trump's focus on interest costs comes at a time of renewed attention on the nation's skyrocketing interest payments on its ever-growing federal debt. Interest payments this fiscal year are nearing $1 trillion for the first time in the nation's history. The president just signed the 'big, beautiful bill,' which is expected to add more than $3 trillion to the deficit over the next decade and push interest rates even higher. And Moody's recently downgraded the US debt in part because of the increase in government debt and interest payment ratios. But even if Trump succeeds in pressuring the Fed to reduce rates, it may not significantly lighten the nation's interest payment burden, experts said. The federal funds rate is only one of the factors that influences the interest rates on the federal debt, which is made up of a mix of short-term, medium-length and longer-duration Treasury securities. 'It seems to be an easier lever to pull for those who want to impact either interest costs on the federal debt or economic growth,' said Shai Akabas, vice president of economic policy at the Bipartisan Policy Center. 'But it doesn't mean that action by the Fed will result in the outcome the president or others may want.' What's indisputable is that America's interest costs have soared in recent years, in part because of the nation's growing debt and in part because interest rates rose after a period of super-low rates as the nation combatted high inflation earlier in the decade. The US shelled out $346 billion in interest payments in fiscal 2020. That figure has jumped to a projected $952 billion for the current fiscal year and is expected to exceed $1 trillion in the coming year, according to the Congressional Budget Office. Interest payments are now the second-largest spending category in the federal budget, surpassing Medicare and defense in fiscal year 2024 and trailing only Social Security. Currently, roughly 18 cents of every dollar in tax revenue goes to paying interest on the debt, Akabas said. By the end of the next decade, that figure will jump to about 25 cents. While cutting the federal funds rate may lower rates on shorter-term securities, it may not reduce rates on 10-year or 30-year Treasury bonds. In fact, a sharp cut may increase longer-term rates for several reasons, including that a steep rate cut could spur inflation or could prompt investors to shift to longer-term securities to lock in higher rates, said Marc Goldwein, senior policy director at the Committee for a Responsible Federal Budget. 'The Federal Reserve only has so much power to lower those interest rates,' he said of the rates on longer duration Treasury bonds. 'There's no guarantee that the Fed cutting rates will reduce interest payments at all.' If Trump were truly interested in reducing interest payments, there is a more efficient way to do that, experts said. He could work to lower the annual deficit — though that would likely involve some politically unpalatable changes to taxes and spending, they said. While Trump's agenda package will make historic reductions to federal spending on the nation's safety net, its hefty tax cuts far surpass the savings and widen the annual deficit. 'If your concern is the hundreds of billions of dollars we're adding to the deficit from higher interest costs, the solution is to enact policies that are deficit reducing, not deficit increasing' Goldwein said. See Full Web Article
