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President Donald Trump backed off a threat he has escalated for weeks on Tuesday, telling reporters he doesn't have any plans to fire Federal Reserve Chairman Jerome Powell, according to the Wall Street Journal.
When reporters in the Oval Office asked Trump whether he plans to do so, he replied, “None whatsoever."
"Never did. The press runs away with things. No, I have no intention of firing him," Trump insisted.
The reply was a marked break from the recent past in which Trump proclaimed that Powell's "termination cannot come soon enough" and that he was a "major loser" who is "Mr. Too Late" when it comes to reducing interest rates — even accusing Powell, with no evidence or examples, of manipulating interest rates in 2024 to hurt his presidential campaign.
Trump was the president who initially appointed Powell to lead the Federal Reserve in the first place. However, he has grown enraged at Powell after the central bank head said Trump's tariffs risked price increases and could prevent the Federal Reserve from cutting interest rates as soon as Trump would wish.
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Rate cuts generally result in increased borrowing and spending and energize the economy, but can also worsen inflation during periods when prices are rising quickly. In those situations, the Fed generally raises rates, and reduces borrowing and spending, to try to force price stability, which tends to come at a cost of higher unemployment and slower growth.
Complicating any potential move to fire Powell would be the fact that no president has ever removed a Fed chair before the end of their term, and current law doesn't actually provide a legal mechanism to do so, as part of ensuring the central bank maintains its independence from politicians who might seek to manipulate rates for election season.
The Wall Street Journal's own editorial board has condemned Trump's previous threats against Powell, warning that if Trump even tried to remove him, it could send the stock market into chaos.
