U.S. president-elect Donald Trump has said he will not try to remove Federal Reserve Chair Jerome Powell and will let the central bank chief finish out his current term that runs until May 2026.
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In an interview over the weekend, Trump said he has no plans to cut Powell’s tenure short at the central bank. “I don’t see it,” Trump said when asked if he’ll try and remove Powell from the Fed. Trump appointed Powell, a former private equity executive, as chair of the U.S. Federal Reserve in February 2018.
However, soon after appointing him, Trump began talking publicly about removing him. Trump and Powell clashed over interest rates several times during Trump’s first administration, with Trump threatening to fire him and saying that he has not moved quickly enough to lower interest rates and stimulate the U.S. economy.
Calming Financial Markets
In 2022, current Democratic President Joe Biden reappointed Powell to a second four-year term that ends in 2026. Powell himself offered a firm “no” when asked whether he would leave his post early to allow Trump to pick a replacement for him at the Fed.
The central bank chair also said that he doesn’t think Trump can legally fire him. “Not permitted under the law,” Powell said at a postelection news conference this November. Analysts have repeatedly said that any attempt by Trump to remove Powell early would rattle financial markets, something Trump wants to avoid.
Next Rate Decision
The relationship between Trump and Powell will continue to be watched closely, say central bank observers. The president-elect has said on several occasions that he should have the power to weigh-in on interest rate decisions, which are made independently by the central bank.
The U.S. Federal Reserve’s next decision on interest rates is scheduled for December 18. Futures markets are pricing in a 25-basis point rate cut from the central bank at its last meeting of the year, and see two additional quarter percentage point reductions in 2025.
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