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“President Donald Trump said Wednesday he is not planning to fire Federal Reserve Chair Jerome Powell, but he kept the door open to the possibility and renewed his criticism of the central bank chief for not lowering interest rates. A Bloomberg report earlier Wednesday saying that Trump was likely to fire Powell soon sparked a drop in stocks and the dollar, and a rise in Treasury yields…
“Trump, who has been criticizing Powell on an almost daily basis for being ‘TOO LATE’ to cut interest rates, said the report wasn't true. But Trump confirmed he had floated the idea with Republican lawmakers on Tuesday evening, marking the latest chapter in an escalating campaign by Trump against the independent central bank and its embattled chief.” Reuters
The left is critical of Trump, and urges Powell to remain independent.
“Trump is back to threatening other countries with the imposition of import tariffs that, according to most economists, would cause consumer prices to soar—like, for example, an allegedly imminent 50 percent tax on copper. And that means Trump is back to getting mad at Powell, the chair of the Federal Reserve committee that effectively sets interest rates in the U.S., for saying that tariffs will cause inflation and that, as a result, interest rates need to stay high…
“Trump wants to cut rates to juice borrowing and spending, and to make the country’s GDP numbers go zoom, but pretty much everyone besides MAGA cultists agrees that lowering interest rates with more tariffs on the horizon would be a risky move given that lowering interest rates can itself trigger inflation.”
Ben Mathis-Lilley, Slate
“[If] our central bank plows ahead with rate cuts in the face of rising inflation, that would only create more inflation. This in turn would spook the stock market and weaken the dollar. Sooner or later, the Fed would have to reverse course and tighten money, creating ‘stagflation’— simultaneous inflation and recession. It would be better not to raise tariffs through the roof, better not to inflate the national debt to finance tax cuts for billionaires, better not to end the independence of the Fed.”
Robert Kuttner, American Prospect
“‘I was surprised he was appointed,’ Trump said. ‘I was surprised, frankly, that Biden put him in and extended him.’… I can appreciate the fact that memories can be short in American politics, and Trump often has no use for the integrity of recent history, but there’s no reason for Trump to be ‘surprised’ that Powell was appointed as the Fed chair — because Trump is the one who chose him for the position in 2017.”
Steve Benen, MSNBC
“If investors believe the Fed is lowering rates for political reasons, they might become more concerned about inflation and demand higher yields on long-term bonds to make up for the chance of future inflation eating into their returns. That’s what happened in Turkey amid its inflation crisis…
“From August 2021 to January 2022, the central bank of Turkey cut its benchmark interest rate from 19 percent to 14 percent. Over the same period, yields on 10-year Turkish bonds increased from 17 percent to 23 percent. Investors, so concerned about Turkey’s irresponsible monetary policy, demanded higher compensation for holding the government’s debt — undermining the central bank’s attempts to lower borrowing costs…
“Politicians aren’t good at monetary policy. They face a powerful temptation to goose the economy in the short term, even at the cost of future growth… That’s why independent central banks exist: to take the long view… A permanent loss of Federal Reserve credibility would not just be a problem for rich investors; American families would also feel the pain.”
Editorial Board, Washington Post
The right is generally critical of Powell, and urges him to cooperate with Trump.
The right is generally critical of Powell, and urges him to cooperate with Trump.
“In 1965, the Fed increased interest rates because President Lyndon Johnson’s welfare-state expansion and Vietnam War spending had caused inflation to skyrocket. The president invited Fed chairman William McChesney Martin to his ranch to discuss these rate hikes, and eyewitnesses report Johnson shouting at Martin and shoving him for not doing his bidding. Martin accommodated Johnson by temporarily holding rates steady (although he raised them later in 1966)…
“In 1972, President Richard Nixon successfully sought an expansive monetary regime from then-chairman Arthur Burns. Burns candidly noted that ‘We dare not exercise our independence for fear of losing it.’ Perhaps we can now unclutch our pearls as we consider Trump’s latest attempt to influence Fed decision-making.”
Richard M. Reinsch II, Spectator World
“Right now, America’s two most powerful economic engines — fiscal and monetary policy — run in separate lanes with no traffic signals. Fiscal policy, controlled by the Treasury and Congress, focuses on taxes, spending and government borrowing. Monetary policy, controlled by the Federal Reserve and its Federal Open Market Committee, manages interest rates and the money supply. The Treasury writes the checks. The Fed sets the cost of money. But they operate with little coordination…
“For the last half-century, the Fed has immersed itself in an insular culture, now bordering on paranoia, intent on resisting White House influence… Even smart, structured coordination with the White House is seen as downright dangerous. There’s no law against such cooperation. Just outdated fear. Trump’s call to unite his efforts with the Fed’s cuts through the fog. Independence doesn’t require isolation, and coordination isn’t surrender, but plain sense.”
Alan Rechtschaffen, New York Post
Others note, “Mr. Powell has made policy and political missteps. He admits he was too slow to recognize the accelerating inflation of 2021-22—Mr. Trump is right to call him ‘too late’ for that. He then delivered interest-rate cuts starting in September 2024 despite mixed (at best) data arguing for reductions. Many Republicans perceive this as an attempt to boost Kamala Harris’s presidential prospects. We doubt that’s what Mr. Powell intended, but appearances matter in politics…
“Now Mr. Powell is resisting Mr. Trump’s demands for additional rate cuts. That’s probably right on the policy merits—see this week’s elevated consumer-price inflation report—but it piles pressure on Mr. Trump and big spenders in Congress by pushing up federal debt-service costs… But love or loathe Mr. Powell, Mr. Trump chose him. Mr. Trump also chose the tariff taxes, and a multitude of no-growth tax and spending handouts in the new budget bill. Now the President has to live with his choices.”
Editorial Board, Wall Street Journal
