Trump Indicates Powell Likely to Stay as Federal Reserve Chair

December 09, 2024 02:02 PM AEDT | By Team Kalkine Media

Trump Indicates Powell Likely to Stay as Federal Reserve Chair — Image source: Shutterstock

Trump and Powell’s Tense History

Jerome Powell, originally appointed as Federal Reserve Chair by Trump in 2017, was reappointed for a second term by President Joe Biden. During his first presidency, Trump frequently clashed with Powell over interest rate policies, accusing the Federal Reserve of overly aggressive rate hikes in 2018 and insufficient rate cuts thereafter. At one point, Trump labeled Powell as “the enemy” for decisions that Trump argued hurt economic growth.

Despite the tension, Trump did praise Powell in 2020 for decisive rate cuts to near-zero levels, which aimed to mitigate the economic downturn caused by the global pandemic. Powell’s ability to navigate economic challenges and maintain central bank independence has been both criticized and lauded across political divides.

Independence of the Federal Reserve

The Federal Reserve operates as an independent institution to ensure its decisions are insulated from political pressure, a point Powell has consistently defended. In November, Powell reaffirmed that his role as chair is protected by legal safeguards, which allow for removal only under specific circumstances. He emphasized that independence helps stabilize inflation and promote economic growth.

Trump, however, has argued that the president should have more influence over Federal Reserve decisions, citing his own financial successes as evidence of his economic instincts. He expressed confidence in his understanding of monetary policy, stating, “I think I have a better instinct than, in many cases, people that would be on the Federal Reserve.”

Powell, along with many economists, continues to advocate for the Federal Reserve’s autonomy, emphasizing its benefit to public interests. For now, it appears that Trump is content with Powell remaining in his role, signaling a departure from past disputes.

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