Latest news with #economy
Yahoo
22 minutes ago
- Business
- Yahoo
Republican senators caution Trump against firing Fed chair Jerome Powell
WASHINGTON (AP) — Federal Reserve Chair Jerome Powell is gaining some key backing on Capitol Hill from GOP senators who fear the repercussions if President Donald Trump follows through with threats to try and remove the politically independent central banker. As Trump seemingly waffled back and forth this week on trying to dismiss the Fed chair, some Republicans in Congress began to speak up and warn that such a move would be a mistake. Trump would potentially obliterate the Fed's independence from political influence and inject uncertainty into the foundations of the U.S. economy if he fires Powell. 'If anybody thinks it would be a good idea for the Fed to become another agency in the government subject to the president, they're making a huge mistake,' GOP North Carolina Sen. Thom Tillis said in a floor speech. The measure of support from GOP members of the Senate Committee on Banking, Housing, and Urban Affairs showed how traditional Republicans are carefully navigating a presidency in which Trump often flirts with ideas — like steep tariffs or firing the Fed chair — that threaten to undermine confidence in the U.S. economy. Tillis, who recently decided not to seek reelection after clashing with Trump, later told The Associated Press that the economic fallout from Powell's firing would mostly hurt 'little guys like me that grew up in trailer parks that may have a few thousand dollars in a 401k.' He also pointed out that the underlying complaint that Trump has with the Fed — its reluctance to cut interest rates — is not controlled by Powell alone, but instead a 12-member committee. 'The markets expect an independent, central bank,' said GOP South Dakota Sen. Mike Rounds, who cautioned against firing Powell. 'And if they thought for a minute that he wasn't independent, it would cast a spell over the forecasts and the integrity of the decisions being made by the bank.' Still, plenty of other Republicans think that dismissing Powell is a fine idea. 'The most incompetent, worst Federal Reserve chairman in American history should resign,' said GOP Ohio Sen. Bernie Moreno. Trump said he was also encouraged to fire Powell during a meeting with about a dozen far-right House members Tuesday evening. Do presidents have authority to fire the Fed chair? House Speaker Mike Johnson, R-La., told reporters that he was 'unhappy with the leadership" at the Fed, but added 'I'm honestly not sure whether that executive authority exists' to fire Powell. House Financial Services Committee chair French Hill has underscored that presidents don't have the authority to fire the Fed chair, yet has also been sympathetic to Trump's complaints about Powell's leadership. He and other Republicans have also noted that Powell's term as chair is ending next year anyway, and Trump will have an opportunity to name a new chair then. When Congress started the Federal Reserve over 100 years ago, it insulated it from political pressure by stipulating that its governors and chair could only be fired 'for cause' — a higher bar than most political appointees. However, the Trump administration has maneuvered to meet that standard by accusing Powell of mishandling a $2.5 billion renovation project at the Fed's headquarters. 'When his initial attempts to bully Powell failed, Trump and Republicans in Congress suddenly decided to look into how much the Fed is spending on building renovations,' Sen. Elizabeth Warren, the top Democrat on the Senate Banking Committee, said in a speech Wednesday. 'Independence does not mean impunity and I have long pushed for more transparency and accountability at the Fed. But give me a break.' After Powell sent Congress a letter detailing parts of the renovation project, Sen. Tim Scott, the Senate Banking Committee chair, released a short statement saying Scott 'has continued to call for increased transparency and accountability at the Federal Reserve, and this letter is consistent with improving the communication and transparency he is seeking.' Avoiding a protracted legal battle Regardless, it would be legally dubious to fire Powell over the renovation. "That would be litigated and I don't see a reason, for cause or otherwise, to remove him,' Sen. John Kennedy, a Republican member of the Senate committee that oversees the Fed, told reporters this week. He added that he understood the president's 'frustration' with the Fed's reluctance to lower interest rates as it tries to tamp down inflation, saying, 'I get that, but I think it's very important the Federal Reserve remains independent.' Even those Republicans who argued that the president has grounds to fire Powell and piled criticism on the central banker conceded that it would still be a painful step. 'That's a decision the president will make, and he's being very deliberate about it," said Moreno, the Ohio senator who called for Powell's resignation. 'But I don't think we should put the country through any of that." Stephen Groves, The Associated Press Sign in to access your portfolio
Zawya
22 minutes ago
- Business
- Zawya
Fed's Williams says tariff economic impact is only just starting
NEW YORK: Federal Reserve Bank of New York President John Williams said Wednesday that monetary policy is in the right place to allow central bankers to monitor the economy before taking their next steps, while warning that the impact of trade tariffs is only just starting to hit the economy. 'Maintaining this modestly restrictive stance of monetary policy is entirely appropriate to achieve our maximum employment and price stability goals,' Williams said in a speech given before a gathering of the New York Association for Business Economics. Holding at current levels 'allows for time to closely analyze incoming data, assess the evolving outlook, and evaluate the balance of risks to achieving our dual mandate goals.' Williams said that the current state of the economy is good and labor markets are solid, although he expects both of those to moderate as the year advances. The bank president pointed to ongoing uncertainty and warned against complacency over the impact of President Donald Trump's import tax surge. 'It's important to note that it's still early days for the effects of tariffs, which take time to come into full force,' Williams said. 'Although we are only seeing relatively modest effects of tariffs in the hard aggregate data so far, I expect those effects to increase in coming months.' 'I expect tariffs to boost inflation by about 1 percentage point over the second half of this year and the first part of next year,' he added. Williams said that he expects the economy to slow to around a 1% growth rate this year, and for the unemployment rate, now at 4.1%, to rise to 4.5% by year's end. On the inflation front, Williams said he sees inflation coming in between 3% and 3.5% this year, before ebbing back to 'about' 2.5% next year. Williams sees inflation at the 2% target in 2027. He also said that he expects inflation in June to stand at 2.5% and core prices at 2.75%. Williams weighed in on what had proved to be a tumultuous day for the central bank, as markets were buffeted by reports that Trump was moving closer to firing Fed Chairman Jerome Powell, a notion which the president later knocked down. 'I can't comment' on what the president said and how markets reacted, Williams told reporters after his speech. Responding to a question about what he would do as vice-chairman of the rate setting Federal Open Market Committee if Powell were removed, Williams said independent central banks deliver better results and noted that in his experience Fed officials and staff maintain a 'laser-like' focus on the central bank's overall mission and its work to keep inflation contained and the job market strong. Trump has repeatedly blasted the Fed for not cutting rates, arguing the central bank needs to move the cost of short-term credit down to crisis levels. Meanwhile, most Fed officials say they are in a wait-and-see mode regarding rate cuts, as they look to see how the president's tariffs will affect inflation, which even now is at levels that stand above the Fed's 2% target level. At the Fed's June policy meeting, officials penciled in two rate cuts for later this year and markets believe the easings could start at the September FOMC meeting. That said, a small minority of Fed officials have suggested an openness to cutting rates at the July 29-30 meeting, believing that any tariff-driven inflation will be a one-off that officials can ignore. Williams also told reporters that amid a drop in the dollar its status as the preeminent reserve currency remains unchanged. 'There are a lot of fundamental factors that support the role of the dollar … in global trade and in global financial markets, and that I see is unchanged now.' (Reporting by Michael S. Derby; editing by Diane Craft)
Washington Post
24 minutes ago
- Business
- Washington Post
Republican senators caution Trump against firing Fed chair Jerome Powell
WASHINGTON — Federal Reserve Chair Jerome Powell is gaining some key backing on Capitol Hill from GOP senators who fear the repercussions if President Donald Trump follows through with threats to try and remove the politically independent central banker. As Trump seemingly waffled back and forth this week on trying to dismiss the Fed chair, some Republicans in Congress began to speak up and warn that such a move would be a mistake. Trump would potentially obliterate the Fed's independence from political influence and inject uncertainty into the foundations of the U.S. economy if he fires Powell.
Associated Press
24 minutes ago
- Business
- Associated Press
Republican senators caution Trump against firing Fed chair Jerome Powell
WASHINGTON (AP) — Federal Reserve Chair Jerome Powell is gaining some key backing on Capitol Hill from GOP senators who fear the repercussions if President Donald Trump follows through with threats to try and remove the politically independent central banker. As Trump seemingly waffled back and forth this week on trying to dismiss the Fed chair, some Republicans in Congress began to speak up and warn that such a move would be a mistake. Trump would potentially obliterate the Fed's independence from political influence and inject uncertainty into the foundations of the U.S. economy if he fires Powell. 'If anybody thinks it would be a good idea for the Fed to become another agency in the government subject to the president, they're making a huge mistake,' GOP North Carolina Sen. Thom Tillis said in a floor speech. The measure of support from GOP members of the Senate Committee on Banking, Housing, and Urban Affairs showed how traditional Republicans are carefully navigating a presidency in which Trump often flirts with ideas — like steep tariffs or firing the Fed chair — that threaten to undermine confidence in the U.S. economy. Tillis, who recently decided not to seek reelection after clashing with Trump, later told The Associated Press that the economic fallout from Powell's firing would mostly hurt 'little guys like me that grew up in trailer parks that may have a few thousand dollars in a 401k.' He also pointed out that the underlying complaint that Trump has with the Fed — its reluctance to cut interest rates — is not controlled by Powell alone, but instead a 12-member committee. 'The markets expect an independent, central bank,' said GOP South Dakota Sen. Mike Rounds, who cautioned against firing Powell. 'And if they thought for a minute that he wasn't independent, it would cast a spell over the forecasts and the integrity of the decisions being made by the bank.' Still, plenty of other Republicans think that dismissing Powell is a fine idea. 'The most incompetent, worst Federal Reserve chairman in American history should resign,' said GOP Ohio Sen. Bernie Moreno. Trump said he was also encouraged to fire Powell during a meeting with about a dozen far-right House members Tuesday evening. Do presidents have authority to fire the Fed chair? House Speaker Mike Johnson, R-La., told reporters that he was 'unhappy with the leadership' at the Fed, but added 'I'm honestly not sure whether that executive authority exists' to fire Powell. House Financial Services Committee chair French Hill has underscored that presidents don't have the authority to fire the Fed chair, yet has also been sympathetic to Trump's complaints about Powell's leadership. He and other Republicans have also noted that Powell's term as chair is ending next year anyway, and Trump will have an opportunity to name a new chair then. When Congress started the Federal Reserve over 100 years ago, it insulated it from political pressure by stipulating that its governors and chair could only be fired 'for cause' — a higher bar than most political appointees. However, the Trump administration has maneuvered to meet that standard by accusing Powell of mishandling a $2.5 billion renovation project at the Fed's headquarters. 'When his initial attempts to bully Powell failed, Trump and Republicans in Congress suddenly decided to look into how much the Fed is spending on building renovations,' Sen. Elizabeth Warren, the top Democrat on the Senate Banking Committee, said in a speech Wednesday. 'Independence does not mean impunity and I have long pushed for more transparency and accountability at the Fed. But give me a break.' After Powell sent Congress a letter detailing parts of the renovation project, Sen. Tim Scott, the Senate Banking Committee chair, released a short statement saying Scott 'has continued to call for increased transparency and accountability at the Federal Reserve, and this letter is consistent with improving the communication and transparency he is seeking.' Avoiding a protracted legal battle Regardless, it would be legally dubious to fire Powell over the renovation. 'That would be litigated and I don't see a reason, for cause or otherwise, to remove him,' Sen. John Kennedy, a Republican member of the Senate committee that oversees the Fed, told reporters this week. He added that he understood the president's 'frustration' with the Fed's reluctance to lower interest rates as it tries to tamp down inflation, saying, 'I get that, but I think it's very important the Federal Reserve remains independent.' Even those Republicans who argued that the president has grounds to fire Powell and piled criticism on the central banker conceded that it would still be a painful step. 'That's a decision the president will make, and he's being very deliberate about it,' said Moreno, the Ohio senator who called for Powell's resignation. 'But I don't think we should put the country through any of that.'
CNN
24 minutes ago
- Politics
- CNN
Analysis: Trump's angry, erratic behavior explains his lowball poll numbers
Donald Trump's wild and whirling day showed why most Americans disapprove of him and think he's ignoring their key issues — and why his most loyal supporters will never desert him. The president's incessant assaults on the national psyche mean everyone has become a little numb to his shocking style of politics. But even for him, Wednesday was a reckless ride, on which he only sparingly addressed the voter concerns that sent him back to the White House. Trump ignited more speculation he may fire Federal Reserve Chair Jerome Powell after a Tuesday meeting at which he polled lawmakers about what he should do, CNN reported. Ousting Powell would be the most overt attempt by a modern president to interfere in the Fed's role of setting interest rates and could tip the global economy over a cliff. It might also be the riskiest power grab yet of Trump's expansive second term, since it would traumatize markets by obliterating an assumption that made the US the world's most powerful economy — that presidents don't emulate developing world dictators by cooking the books for political gain. Trump later insisted it was 'highly unlikely' he'd dismiss Powell after markets shuddered. But given his volatile nature and obvious desire to exact revenge on an official who has refused to bow to his autocratic impulses, few will take such assurances to the (central) bank. Meanwhile, in an extraordinary outburst on Truth Social, Trump blasted some of the most vocal MAGA personalities as 'weaklings' over their criticism of his administration's refusal to throw open files on the late convicted sex offender Jeffrey Epstein. Trump's defensiveness supercharged a furor simmering for more than a week — and is likely to spur more claims he's got something to hide and to encourage Democratic calls for more transparency. In seeking to defuse a conspiracy, Trump created a new one, nonsensically accusing Democrats of being behind the storm — even though Epstein was charged with sex trafficking by Trump's own first-term Justice Department. 'Their new SCAM is what we will forever call the Jeffrey Epstein Hoax, and my PAST supporters have bought into this 'bullsh*t,' hook, line, and sinker,' Trump wrote on Truth Social. These two dramas — which are hardly what keeps most voters awake at night — encapsulate the exceptional and often dangerous aspects of Trump's unique presidency. He's looking for a Fed chief who will throw caution to the wind and slash interest rates in pursuit of fast growth. As with his obsession with tariffs, which similarly affronts economic orthodoxy, Trump is itching to implement a risky pet theory that many experts predict would court disaster. This is more in keeping with the whims of a king than a conventional president who respects democratic norms. After all, Powell is praised by many economists for doing the impossible — taming the worst inflation crisis in 40 years without setting off a recession or surging unemployment. But unlike the Fed chief, whom he appointed in his first term, Trump acts on hunches. If he gets this wrong and ignites contagion in the financial markets, the savings and livelihoods of millions could be on the line. The Epstein case is extraordinary in its own way, since Trump, the most prolific spinner of conspiracy theories in modern politics, is now trapped in a firestorm of innuendo and falsehoods that he helped to create. He's getting payback for long seeding extreme distrust for government in his movement — which he's exploited to build a personal power base on a foundation of voter grievance. His failure to quell the Epstein storyline is a warning of what happens to a democracy when facts and truth are trashed and the legitimacy of government is destroyed because a substantial community doubts everything it's told. As often happens, Trumpian cacophony obscured some more significant victories for the president, including his expanding demolition job on the federal government — a core campaign goal. The White House on Wednesday was still celebrating a Supreme Court ruling that will allow it to push ahead with the gutting of the Education Department with mass firings. Dismantling the agency has been an elusive GOP priority going back to Ronald Reagan. Trump also made progress on another longtime goal that other Republican presidents couldn't get done as a bill withdrawing federal funding for public broadcasting moved closer to a vote. At the White House, Trump also signed the HALT Fentanyl Act, which passed Congress with bipartisan majorities. The measure strengthens penalties for traffickers, although critics warn it could counterproductively lead to the incarceration of addicts. The president presided over a ceremony that featured relatives of Americans who tragically died after taking the drug. The compassion he showed underscored why he's so loved among his grassroots base. The plague of fentanyl is especially resonant with Trump's supporters in rural areas of red states, which have paid a terrible price in the opioid epidemic. The president recognized the pain such drugs are causing for droves of American families by putting it at the center of his campaigns — probably more than any other politician. The flow of fentanyl across the southern border means this issue intersects with another primary Trump cause that is popular with his voters — hardline immigration policy. His attentiveness to public opinion in this area helped unify and expand the working-class coalition that twice won the White House. These voters believe they have a president who listens to them. Trump's frenetic day helps explain some of the findings of a new CNN/SSRS poll released on Wednesday. His willingness to take huge risks with the economy, his obsession with sideshows like the Epstein case, and his habit of acting for a minority of the country means he's put a ceiling on his own poll numbers. In the CNN poll, Trump's approval rating was largely unchanged from the spring, at 42%. But less than a year after an election that turned in part on frustration about the cost of groceries and housing, only 37% of those polled say Trump is concentrating on the right issues — down 6 points from March. Neither a MAGA freakout around Epstein nor a melodrama over Powell was at the top of voters' concerns in 2024. More worryingly for Trump, he's underwater on many of the current questions most voters worry about. Normally, this would be a sign of a presidency in deep trouble. Second-term presidents who dip this low typically endure rough years leading up to their White House exit. Trump is a unique case, however. His current approval numbers are in a range that is typical for his entire time in the White House. His willingness to push his powers to the limit — and sometimes beyond the law and the Constitution — and pliant GOP majorities in Congress mean that he's less reliant on building public support for his priorities than more conventional presidents. Still, he still seems to be doing the opposite of what most voters want. His biggest-ever domestic triumph — the just-passed 'One Big Beautiful Bill Act,' which contains much of his second-term domestic agenda — is opposed by 61% of Americans. And his approval among independents is an anemic 32%. These numbers may send a chill into the hearts of vulnerable Republican lawmakers running in swing districts in next year's midterm elections. And they contextualize a new effort by Texas Gov. Greg Abbott to require the redrawing of the state's congressional map in an apparent effort to boost the GOP's chances of clinging onto its narrow House majority. The poll also adds texture to the current turbulence in MAGA world over Epstein, which began when Attorney General Pamela Bondi hinted that new information reinforced claims that the accused sex trafficker was murdered in prison and that authorities had a list of his famous clients. Last week, however, her Justice Department released a memo saying there was no incriminating evidence about any client list and that Epstein took his own life. For all the fury among MAGA media stars, the CNN/SSRS findings show that Trump's standing with Republicans is rock-solid at 88%. Of course, even limited falloff of enthusiasm among the most radical members of the Trump base could still hurt Republicans in close races in next year's midterms. And MAGA podcasters keen to monetize the fury of activists will keep fanning the flames of the Epstein controversy. But there is clearly still massive support for Trump among tens of millions of grassroots Republicans across the country.
