Trump vs. Powell: Navigating the Federal Reserve Debate

Donald Trump, U.S. President-elect, expressed intentions not to remove Federal Reserve Chair Jerome Powell upon taking office. Tensions with Powell over interest rates persist, reminiscent of their past clashes. Trump advocates lower borrowing costs and tariffs, potentially conflicting with Powell’s inflation moderation strategies and the Fed’s independence.

In a recent interview aired on Sunday, U.S. President-elect Donald Trump stated he does not intend to replace Federal Reserve Chair Jerome Powell once he assumes office in January. Trump's remarks came during an appearance on NBC News' "Meet the Press with Kristen Welker". Despite past clashes over monetary policy, Trump does not foresee directing Powell to step down before the end of his term in 2026.

Trump, who has previously criticized Powell over interest rate decisions, suggested that Powell might not quietly acquiesce if asked to leave. However, he noted Powell would likely accept a direct order to step down. Trump's campaign promises include reducing mortgage rates and overall borrowing costs for Americans, which again could lead to policy disagreements with Powell.

The ongoing tension between Trump and Powell echoes past disagreements, as Trump previously criticized the Fed's rate hikes during his first term. Traders anticipate a potential rate cut at the upcoming Federal Open Market Committee meeting as the U.S. labor market shows signs of cooling. The Fed's policy rate is expected to be lowered to a range of 4.25%-4.50%, continuing its current easing trajectory.

(With inputs from agencies.)