Latest news with #economicpolicy
Yahoo
9 hours ago
- Business
- Yahoo
David Rubenstein gives his take on Trump's threats to fire Powell
President Trump has made no secret of his anger toward the Federal Reserve and its decision not to cut rates. Trump says he is not planning on firing Fed Chair Jerome Powell, but he has left the door open to ousting him. The Carlyle Group co-founder and co-chairman David Rubenstein weighs in on the turmoil, explaining why he thinks Powell has "done a very good job." To watch more expert insights and analysis on the latest market action, check out more Opening Bid here. All right, for today's Power Player, I got a chance to speak with David Rubenstein, co-founder and co-chairman of global investment firm Carlyle about the ongoing saga around President Trump's dissatisfaction with Fed chair J. Powell. Trump telling reporters in the Oval Office Wednesday that he doesn't plan to fire Powell after Bloomberg and CBS reports said the chairman was on the chopping block. Here's what David Rubenstein told me about the situation. Well, President, uh, Trump just as you said, walked back that statement. So, what I just said before we went on the air, so before he went on the air is that he said he's not planning to fire Powell. As you probably know, J. Powell worked at Carlyle, and in effect for me for eight years. I hired him out of the George Herbert Walker Bush Administration, a very smart man. And you know, I recognized not everybody, uh, says he's done a perfect job, but I think he's done a very good job because he tells you what he's going to do or the Fed's likely to do before they do it, which is unusual for a lot of Fed chairs. And after it's done within 30 minutes, he will explain it exhausting detail what they did and why they did it. And I think that's helpful. You may remember in the days of, uh, William McChesney Martin or or Paul Volcker, they would do what they wanted to do and you had to guess what they did and why they did it. Now it's much more transparent. I think Jay's done a good job in that. Secondly, we haven't had a recession since J. Powell's been chairman of the Fed. Now, you know, recessions occur in the United States roughly every seven years or so, and obviously the Fed chairman is not the only person responsible for their being or not being a a recession. But I think we haven't had one because I think he managed the inflation reasonably well. Remember inflation went to 8%. And it went to 8% because um, the Bush administration or the, I'm sorry, the Trump administration and the Biden administration both both uh put a lot of money into the economy to keep us during the Covid period of time from going into recession. So we injected about five trillion dollars into the economy without corresponding tax increases. The result was some inflation. Now, some people made a mistake initially by saying it was transitory, and I think J. Powell would recognize that it wasn't transitory. But once they recognized it wasn't transitory, they began rate increases that I think dealt with the inflation problems brought it down now. Not quite where they want it to be, but lower than it had been. I think the most recent number showed about a 2.7% increase the last month, but uh, the Fed's target is 2%, so they got a way to go. David, how important is it that um, Jerome Powell finishes out this term? In terms of importance to the Federal Reserve as an institution and as the major player in markets. Well remember, the Federal Reserve has two jobs. It was set up originally to take care of inflation, make sure the currency was strong, and in the 1970s was given additional job of worry about unemployment. And the Fed is seen as being independent of the president and power because when you're independent, the theory is you can preserve the currency. You're not a subject to political pressure. And I think that's worked well for our country, and I think most people commented on that have said this worked well, and the Federal Reserve is really the crown jewel of the federal um governmental system in many ways because it's seen as very independent, uh, very merit-oriented, and I think many of the people who are most respected in our country over the years have been chairs of the Federal Reserve like Paul Volcker but and Ben Bernanke. But I I recognize that there are some people who are not happy with uh the fact that interest rates are have not gone down as much as let's say they've gone down in in Europe. But the United States is more complicated economy in some ways than Europe, and Europe had lowered interest rates because their economy was softening so much. They had to uh help the economy move forward. We haven't had that kind of softening. So, um, I J. Powell, uh to his credit, in my view, has not commented on anything that President Trump has said about him. In other words, if it were, if we I was getting beat up every day, or every occasionally from time to time by the president, any president, I probably wouldn't be as quiet as Jay has been. But Jay has basically not responded, not taken the bait. And I think uh he'd like to finish out the term if he could, which finishes in May of '26. And David, as someone that uh hired Jerome Powell, worked with him for what, eight years at at Carlyle, um how do you think he's taking these criticisms? And are you surprised that he hasn't just the hell with this? I'm I'm stepping down and I'm going to go, you know, enjoy myself for the next couple of years. I haven't talked to him specifically about it, so I'm just surmising, but my guess is that nobody likes to be criticized by the President of the United States. Who likes to be criticized by the President of the United States? No one really does, but he hasn't responded to any of the criticism, which I give him great credit for doing. I don't think I could have done that, because he's just decided to just take care of the the job he has and worry about getting inflation down, and interest rates will come down when they they are designed to come down. But remember, there is a uh a FOMC of 12 people, seven members from the Federal Reserve board and five rotating members from the various Federal Reserve boards around the country. 12 people, that's the FOMC, the Federal Open Market Committee. And they make the decision. J. Powell is the chairman, presumably he has a lot of influence, but it's not the only person making a decision. How important is it that the whoever succeeds uh Jerome Powell's Fed chair that they could be someone that is independent from the executive branch, someone that could stand up to the president, you know, because I think some of the thinking, just based on people I've talked to David, is that we get uh someone who has that direct line to President Trump, gets put in there because he promises the president they're going to cut rates, and now this person's doing everything the president asked them to do. Well, I think the markets would respond better uh if somebody is seen as independent. The candidates that have been mentioned, some of them are excellent. And I think they would be somewhat independent, but obviously, many of them have close relationship with the president. The president made it clear what he wants. Some of the people or candidates have already said they would lower interest rates, so maybe they're their existing view is that interest rates should come down and not because of presidential pressure. But I think overall, it would be a good thing for the country to have a strong Fed chair um to succeed J. Powell rather than a weak Fed chair. Out of all the names that we've heard uh and have you heard too, David, Kevin Warsh, um Kevin Hassett, Secretary Benson still in the mix, Christopher Waller at the Fed, is there one person out of that that group of four folks that are reportedly leading the uh the nomination uh or or top of mind with the president that you think would would be best suited to do this job at this moment? I know um I a number of them. I think I know three of them. Uh and I would say they are uh the three that I know um are are all talented, and all could do a good job. But until you get the job, you don't know, you know, how strong somebody's going to be and you don't know how independent they will be. Um so I I just can't say now who'd be better, but I think of the candidates that I know, all of them would be would be able to do a likely a good likely would be able to do a good job. Related Videos Powell isn't the only Fed hawk: Williams keen to hold rates Trump vs. Powell, earnings, retail sales data: 3 Things Trump-Powell to Be Continuing Headwind for Dollar, FX: Saravelos 'Sell America' Returns as Trump Raises Pressure on Powell 登入存取你的投資組合
Yahoo
9 hours ago
- Business
- Yahoo
Powell isn't the only Fed hawk: Williams keen to hold rates
The Federal Reserve is in focus after reports on Wednesday said that President Trump would soon fire Fed Chair Jerome Powell. The president later denied the reports, saying it's "unlikely" he'll fire Powell but noted that ongoing renovations at the Fed building could be a misuse of funds. Yahoo Finance Fed Reporter Jennifer Schonberger explains that even if Trump were to remove Powell, cutting rates is a committee decision, and not all Fed officials agree with the president that it's time to lower interest rates. For instance, Fed Bank of New York president John Williams indicated on Wednesday he is content to hold rates steady, citing inflation expectations. To watch more expert insights and analysis on the latest market action, check out more Morning Brief here. Uh Jennifer, let's start with you. And yes, the president did deny it yesterday. But it wasn't, he was like, well, maybe he'll still have to leave. So it wasn't entirely a his job is safe, you know, for the remainder of his term kind of a denial. Yeah, it's certainly been a wild ride this week, hasn't it, Julie? The president seeming to suggest earlier in the week on Tuesday that he has for cause to fire Fed Chair Powell, based on statements that Chair Powell made to the Senate Banking Committee on renovations about the Fed's headquarters here in Washington DC. I'm no lawyer, but the statute, the law clearly does state that the Fed has power over its headquarters and what it needs to do to keep its headquarters up to date. Uh, that said, there were reports yesterday, Wednesday, that the president was drafting a letter to fire the Fed chair, only to turn around, as you said, and tell reporters that he has no intention of firing Fed Chair Jay Powell, but sort of left the door open. Um, we saw reaction in the bond market. Uh the 10 years seemed to pop up. Stocks certainly reacted. Uh and he said that he had talked to congressional Republicans behind closed doors, who said they were on board with the notion of firing Powell, but that he wasn't going to do it. So clearly the president pulling back from the brink again. This is the second go around we've really seen of this so far this year, and it likely won't be the last. But I think it's important to note that even if you were to get rid of the Fed chair, it's really the interest rate setting committee, the whole Federal Open Market Committee, that sets interest rates. So it's a holistic decision. It's not the Fed chair himself. And last night we heard from the vice chair of the FOMC, New York Fed President John Williams, who says that he is very content to hold rates steady for, it seems a foreseeable future. He says we are starting to see the impact of tariffs on inflation, and he is forecasting that we could see a full percentage increase in inflation in the second half of this year into early next year. He's looking at inflation popping up to about three to three and a half percent for 2025. And he also added that the weaker dollar could be inflationary as well. And then Jen, uh, we mentioned that we, um, are going to hear from Adriana Kugler today as well. Where does she tend to stand in on the Fed spectrum? Yeah, she seems to be more at the hawkish end of the spectrum. She is supposed to give a speech on housing. We'll see if she mentions anything about housing inflation, which has been somewhat benign, right? It's the goods part of the inflation side that we've seen starting to tick up, not the services as much. Um, so we'll see if she says anything on monetary policy, but she has said that so long as uh there is risk for and upside to inflation, she is content to hold rates steady. We know there is a group of Fed officials within the FOMC who are not in favor of cutting rates at all this year. It sounds like she may be in that camp, can't know for sure, but she is clearly on record saying that she's more concerned about the inflation side of the mandate rather than the employment side. Related Videos David Rubenstein gives his take on Trump's threats to fire Powell Earnings highlights & Fed rate cut odds: What to know Trump vs. Powell, earnings, retail sales data: 3 Things Trump & Coca-Cola, Novartis earnings, Netflix preview: Trending Tickers Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Bloomberg
a day ago
- Business
- Bloomberg
Hassett the Unofficial Frontrunner For Trump's New Fed Chair
Kevin Hassett, one of President Donald Trump's longest-serving economic aides, is the early frontrunner to replace Jerome Powell as Federal Reserve chief next year, according to people familiar with the process. Bloomberg's Molly Smith has more. (Source: Bloomberg)
The Guardian
a day ago
- Business
- The Guardian
Can Trump fire Federal Reserve chair Jerome Powell?
Donald Trump told Republican lawmakers that he plans to fire the US Federal Reserve chair, Jerome Powell, in what would be an unprecedented move against the non-partisan central bank. Trump drafted a letter firing Powell and showed it to House Republicans during a private meeting on Tuesday night, according to the New York Times. Stock markets sank on the news but rose as Trump complicated the story by telling reporters it was 'highly unlikely' he would fire Powell. This isn't the first time Trump has said he will fire Powell, whose term is up in May 2026, though it marks a rapid escalation of his threats to do so. Any move by the White House to formally dismiss the Fed chair would be unprecedented. The president has historically respected the independence of the central bank, and kept out of its way – even if there was disagreement over policy. But, of course, it looks like Trump is following his own playbook. Here's what we know is going on between Trump and the Federal Reserve. As the central bank, the Fed manages the money supply in the US, primarily by setting the interest rate. The interest rate affects how much it costs to borrow money for things like mortgages or other loans. When setting the interest rate, the Fed considers inflation and the labor market, what it calls its 'dual mandate': higher interest rates could bring down inflation, but negatively affect the labor market, while lower interest rates could do the opposite. Over the last few years, starting before Trump's second term, the central bank has been trying to bring down inflation, which peaked at 9% in June 2022. To do that, the Fed raised interest rates to a multi-decade high of between 5.25% and 5.5%. Just a few years before, at the height of the pandemic, in 2020 and 2021, interest rates had been close to zero. Late last year, the Fed lowered interest rates, which are now 4.25% to 4.5% – a whole point lower than where they were a year ago. US stock markets are very sensitive to Fed decisions. Stocks started to climb after September, when the Fed started cutting rates. Trump's tariffs have put the economy in a tailspin. Stock markets were quick to respond to – and recover from – the enormous levies. Fed officials have had four meetings this year in January, March, May and June during which they could have changed interest rates. At all four, they declined to touch the rates, citing economic uncertainty. The pause has made Trump furious. Last month, Trump told Powell in a handwritten note he was 'too late' and demanded that the Fed lower rates. 'You have cost the USA a fortune and continue to do so,' he wrote. 'You should lower the rate – by a lot!' From Trump's perspective, cutting rates could offset the impact that his tariffs are having on the US stock market. But for Fed officials, it would risk exacerbating inflation. In a rare public response, Powell directly pointed to Trump's tariffs as the reason why the Fed has not been able to lower interest rates. 'We went on hold when we saw the size of the tariffs,' Powell said earlier this month. 'Essentially all inflation forecasts for the United States went up materially as a consequence of the tariffs.' Recent inflation data showed that inflation ticked up in June. The annualized inflation rate went from 2.4% in May to 2.7% in June – the highest one-month leap since March 2024. Sign up to This Week in Trumpland A deep dive into the policies, controversies and oddities surrounding the Trump administration after newsletter promotion This doesn't bode well for the possibility of any interest rate cuts at the Fed's next board meeting at the end of July. The supreme court recently suggested that the president cannot fire the Fed chair, which would make it impossible for Trump to fire Powell, should he try to do so. While the court greenlit Trump's firing of two officials serving on US labor boards, the court went out of its way to say the Fed has special constitutional protections. 'The Federal Reserve is uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States,' the court wrote in the May decision. But the Trump administration is trying to find a legal workaround. Trump has recently started accusing Powell of potentially lying to Congress about renovations that took place at the Fed's headquarters in Washington. 'I didn't see him as a guy that needed a palace to live in,' Trump told reporters. 'The one thing I would have never guessed is that he would be spending two and a half billion dollars to build a little extension on to the Fed.' When asked whether he saw it as a fireable offense, Trump said: 'I think it sort of is.' Powell has asked an inspector general to review the costs of the renovations, which were originally slated to cost $1.9bn but rose to $2.5bn due to 'unforeseen conditions', according to the Fed's website. The Fed, which holds huge power over the economy, has to be extremely careful about each decision it makes. Moves made by the central bank can affect the stock market, the value of the US dollar and government bonds – which all, in turn, affect the US economy. On the Fed's independence, Powell said that officials 'will only make our decisions based on our best thinking, based on our best analysis of the data and what is the way to achieve our dual mandate goals as we can to best serve the American people'. 'We will do what we do strictly without consideration of political or any other extraneous factors,' he said.
Telegraph
a day ago
- Business
- Telegraph
The Chancellor's pro-enterprise rhetoric is hollow
The annual Mansion House speech in the City of London is an opportunity for the Chancellor of the Exchequer to set the economic weather. On Tuesday, Rachel Reeves insisted that the sun was coming out when everyone else could see storm clouds gathering. Before the election last year, Ms Reeves made great efforts to woo bankers, entrepreneurs and investors with pledges of fiscal prudence and sensible stewardship as a pro-enterprise Labour Chancellor. But her first Budget wrecked that relationship almost overnight, loading taxes on to employers, hitting the inheritance planning of farmers and business owners, kowtowing to the unions and scaring off thousands of wealthy taxpayers, while boosting spending in the unproductive public sector. The Chancellor tried to make amends with a welter of announcements, including the relaxation of lending rules, the acceleration of new stock market listings and other ostensibly City-friendly amendments. She promised deregulation – even as Angela Rayner is bringing in a Bill loaded with new workers' rights. Her stated aim is to 'boost growth' and yet there are no signs of this happening. The annual inflation rate jumped to 3.6 per cent in June, raising the spectre of 'stagflation' and the likelihood that interest rates will have to stay higher for longer, killing any green shoots that might poke through. It was what was missing from the Chancellor's speech that was alarming. There was no promise to get on top of public spending or reform the two areas sucking the life out of the general economy: welfare and the NHS. The revolt by Labour MPs against benefit reform has effectively killed off any hopes of retrenching the budget. The expectation now is that Ms Reeves will have to bring in tax rises in the autumn, something she did not rule out, thereby ensuring a summer of speculation over what they might be. This is guaranteed to put a brake on investment while well-off investors and would-be entrepreneurs wait to see what is in store. The prospect of a wealth tax is looming ever larger. The Chancellor repeated her claim that 'Britain is open for business' and yet that is belied by the exodus of thousands of multi-millionaires. Until the tax burden is reduced, borrowing cut, spending curtailed and the state pared back, the Chancellor's bullish rhetoric will sound hollow.
