Top Trump aides urged president to tone down attacks on Jerome Powell – The Washington Post
2025-04-23T17:56:18Z
The president’s about-face on the central bank chief, following advice from his treasury and commerce secretaries, sent markets surging.
President Donald Trump’s abrupt shift in rhetoric Tuesday toward Federal Reserve Chair Jerome H. Powell reflected the private lobbying of some of his senior advisers, who had urged the president to back off his incendiary attacks on the central bank, three people familiar with the matter said. On Monday, the stock market fell precipitously as Trump attacked Powell as a “major loser,” fueling speculation that the president would move to fire the Fed chief. But by Tuesday afternoon, Trump appeared to dial back his rhetoric, saying he had “no intention of firing” Powell and arguing that the “press runs away with things.”
Stock futures jumped overnight, and markets surged Wednesday as trading opened.
The president’s shift followed the counsel of several administration officials, including Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick, said the people, who spoke on the condition of anonymity to describe private deliberations. The officials cautioned that the administration did not need further disruption in financial markets from an all-out battle with the Federal Reserve and that it already had several major economic fights on its hands, including new tariffs, the people said. The market turmoil made Trump more open to leaving Powell in his position than he would have been a month ago, one of the people said.
Advertisement
“I would like to see him be a little more active in terms of his idea to lower interest rates,” Trump said Tuesday. “It’s a perfect time to lower interest rates. If he doesn’t, is it the end? No, it’s not, but it would be good timing. It would be. … It could have taken place earlier. But, no, I have no intention to fire him.”
Spokespeople for the Treasury and Commerce departments declined to comment.
White House spokeswoman Taylor Rogers said in a statement: “We do not discuss the President’s private conversations that may or may not have happened. The President has a terrific team of advisers that give him counsel on numerous topics, but at the end of the day, the President is the final decision-maker.”
The comments came as Trump also softened his tone on a trade war with China. The Wall Street Journal reported Tuesday that the administration is considering slashing China tariffs by between 50 percent and 65 percent. Trump had earlier increased tariffs on China to 145 percent.
Advertisement
“We’re doing fine with China. We’re doing fine with every, I think, almost every country. Everybody wants to have involvement with the United States,” Trump said, adding that “they have to make a deal” eventually.
During his first term, Trump had toyed with the idea of removing Powell — whom he had nominated as chair — only to be dissuaded by advisers’ warnings that such a move would upend markets and that he lacked the legal authority to do so. Powell was named to a second term by President Joe Biden, and that appointment is due to expire in May 2026.
In recent weeks and months, Trump had revisited the idea of dumping the Fed chair with new intensity, raising fears among longtime observers that he might finally act on it. Some of the restraints that had once held him back — legal caution, institutional norms and strong pushback from senior officials — had largely been removed.
Advertisement
Under federal law, the Fed chair can be removed only “for cause,” a term widely interpreted to mean serious misconduct or incapacity, not policy disagreement. But Trump and some of his allies have signaled an openness to challenging that precedent, arguing that the statute leaves room for reinterpretation by a White House willing to push legal boundaries.
“The entire environment has shifted quite dramatically,” said Peter Conti-Brown, a Fed historian at the University of Pennsylvania.
Those fears spiked a week ago, after Powell gave a talk to the Economic Club of Chicago in which he laid out in his strongest terms yet his worries about Trump’s economic policies, especially the tariffs.
Trump reacted negatively, posting the following day on his social media platform, Truth Social, that Powell’s “termination cannot come fast enough.” Then on Monday, Trump referred to Powell as a “major loser.” The president warned the U.S. economy could slow without an immediate reduction in interest rates amid the broader fallout from his trade war. The comments spurred a sell-off in all three major stock indexes, although the markets regained much of those losses Tuesday.
Advertisement
“Trump in the end did the smart thing,” said Stephen Moore, who has served as an outside economic adviser to the president. “It’s pretty clear that the markets would have reacted very negatively to the firing of Powell and that given the turmoil in the markets we’ve seen in the last month or so, that this wasn’t a good time to add to more uncertainty.”
The Fed has declined to comment on Trump’s repeated attacks. Meanwhile, Powell has said that the president doesn’t have the legal authority to dismiss him and that he plans to complete his term.
The Fed is structured to set interest rates free from pressure from the White House or Congress. The idea is to insulate monetary policy from short-term political goals, because elected officials often prefer lower interest rates to spur immediate growth, even if it risks higher inflation down the line, which could ultimately harm the broader economy.
Advertisement
Though many analysts said they thought it was unlikely that Trump would actually seek to fire Powell, the risk was high enough to trigger an extremely rare combination of lower prices for U.S. bonds and stocks as well as the dollar on Monday.
The reaction sent a clear signal that risks to Fed independence are “a negative for all major U.S. asset classes,” Krishna Guha of Evercore ISI said. It also provided “a partial foretaste” of what might come if Trump actually tried to fire Powell, Guha said.
The Fed typically raises interest rates to curb inflation by making borrowing more expensive, and it lowers them when it fears the economy is losing steam.
Powell warned last week that Trump’s tariffs are “highly likely” to cause a temporary inflation bump — one that could persist longer than expected.
Cutting rates now could be tricky if inflation rises while the economy slows, a scenario Powell said is also on the table.
Auto-posted from news source
About The Author
