On Thursday, President Donald Trump made an early morning post that shook the confidence of investors. In his post, he called for the “termination” of the chairman of the Federal Reserve. The White House was quick to react, stating that Trump did not suggest firing Jerome Powell. Powell was installed by the president during his first term. Despite White House reassurances, Scott Bessent, the Treasury secretary, has urged caution. At 6:12 a.m., pointing out the news about the European Central Bank, Trump stirred the pot online.
Trump Attacks Powell
“The ECB is expected to cut interest rates for the 7th time, and yet, ‘Too Late’ Jerome Powell of the Fed, who is always TOO LATE AND WRONG, yesterday issued a report which was another, and typical, complete ‘mess!’” Trump wrote.
“Oil prices are down, groceries (even eggs!) are down, and the USA is getting RICH ON TARIFFS,” Trump went on. “Too Late should have lowered Interest Rates, like the ECB, long ago, but he should certainly lower them now. Powell’s termination cannot come fast enough!” the president added. added.
The White House was Quick to Jump in
Megan Casella of CNBC reported, “A White House official tells me today this post should not be seen as a threat to fire Powell. It’s more of an airing, or re-airing, of grievances and frustrations with the central bank chair. And the President is looking forward to the scheduled end of Powell’s term.”
Chief US Economist for Natixis, Christopher Hodge, replied to Trump’s comments by saying: “So previously I thought the odds were very much against Trump trying to remove Powell, but my confidence has faded. Trump seems more comfortable than expected with a slowing economy and equity volatility, and the tariff policies are much more onerous than anticipated, even if they have been walked back a bit.”
He then went on to add that, “the bottom line is the parameters of potential policy outcomes have widened, and while I still think Powell will be retained until his term ends, I am less certain that I was previously.”
Trump cannot fire Powell Without Help
It is unclear if the president will move toward firing Powell, but if he does, he may need the help of the Supreme Court to do so. To add to the issue, reports add that just two weeks ago, Bessent was thinking of quitting. During an appearance on MSNBC’s Morning Joe on Friday, contributor Stephanie Ruhle said that the high-ranking cabinet member was looking for a way out.
“My sources say that Scott Bessent is kind of the odd man out here and, in the inner circle that Trump has, he’s not even close to Scott Bessent or listening to him,” Ruhle said. “Some have said to me, he’s looking for an exit door to try to get himself to the Fed, because in the last few days he’s really hurting his own credibility and history in the markets.”
Things got heated last week
Scott Bessent and Commerce Secretary Howard Lutnick are at odds over Trump’s tariff plan. However, insiders say the ‘real war’ is raging between Howard and Scott. Reportedly, Bessent is cautioning Trump not to fire Powell. He has warned that firing Powell could destabilize financial markets. Spencer Hakimian, hedge fund founder and chief investment officer, said, “Bessent hating his new job of being a full-time babysitter. Just cleaning up Trump, Lutnick, Navarro, etc., diaper all day long.”
