Trump Backs Down: Market Reprieve After Powell Tensions

President Donald Trump has retreated from threats to dismiss Fed Chair Jerome Powell, soothing markets that had been rattled by potential leadership changes and ongoing tariff tensions. Trump's softened stance comes amid optimism for a trade agreement with China that could reduce tariffs significantly.

President Donald Trump stepped back from his push to fire Federal Reserve Chair Jerome Powell, following a week of heated criticisms for not lowering interest rates further. During a session with reporters in the Oval Office, Trump stated he has no plans to dismiss Powell despite previous threats.

This de-escalation was quickly reflected in financial markets, with equity index futures jumping nearly 2% after the announcement. Trump's recent confrontational remarks about tariffs and interest rates had led to a slump in stocks, bonds, and the U.S. dollar.

The move comes as Trump expresses optimism for a beneficial trade deal with China, promising substantially reduced tariffs. The ongoing saga has spotlighted the fragile state of U.S. economic relations and the sensitive balance of power between the presidency and the Federal Reserve.

(With inputs from agencies.)