Trump "changed his words": He did not intend to fire Powell, now is an excellent time to cut interest rates, and US stocks rose after the market

Source: Wall Street News

US President Donald Trump, who had previously been criticizing Federal Reserve Chairman Jerome Powell for failing to cut interest rates quickly enough and even threatening to fire him, said on Tuesday that although he was still unhappy with the Fed's failure to cut rates more rapidly, he had no intention of firing Powell.

When asked if he could confirm that he was not seeking to remove Powell from his position, Trump replied in the Oval Office of the White House, "Absolutely not. Never."

"This is just false rumors spread by the media. No, I have no plan to fire him. I just hope he can be more proactive when it comes to cutting interest rates."

"Would it be the end of the world if he doesn't do that? No. But now is indeed an appropriate time. Anyway, I have no intention of firing him."

However, Trump still reiterated his criticism of Powell.

"We believe that now is an excellent time to cut interest rates, and we hope that our chairman will act ahead of or on time, rather than lagging behind the situation."

Trump had been putting pressure on Powell to cut interest rates in the previous few days. Just on Monday, Trump called Powell a "complete failure" and hinted that the previous interest rate cuts by the Fed were to help former US President Joe Biden.

Last week, Trump said he couldn't wait to see Powell "fired" and also insisted that if he tried to fire him, Powell would leave. Kevin Hassett, the director of the White House National Economic Council, told reporters last Friday that Trump was studying whether he had the right to fire Powell, after the president had repeatedly criticized the Federal Reserve on social media and in public speeches.

In addition, before the European Central Bank cut the benchmark interest rate by 0.25 percentage points to 2.25% last week, Trump had fiercely lashed out at Powell, repeatedly complaining that the Fed was not cutting interest rates fast enough. Trump once called Powell a "complete failure" and also said, "If I want him out, he'll be gone very quickly," and urged for an immediate interest rate cut, which raised concerns about his possible interference in the central bank's independence.

Trump's Change in Attitude Calms Market Sentiment, US Stocks Rise After Hours

Analysts believe that this statement is aimed at calming market tensions and also marks a significant change in Trump's attitude. Previously, he had continuously intensified his criticism of Powell and at one point refused to rule out the possibility of taking unprecedented measures to fire him, causing market turbulence.

On Monday, due to Trump's continued severe criticism of Powell and even the threat of firing him, US stocks, US Treasury bonds, and the US dollar all fell, resulting in a "triple kill" of stocks, exchange rates, and bonds. Safe-haven assets such as gold and the Swiss franc, which has safe-haven properties, accelerated their upward trend, and the price of gold reached a new all-time high.

After Trump stated on Tuesday that he had no intention of firing Powell, the S&P 500 ETF rose 1.2% after hours, and Apple's stock price rose more than 2.7%. Brent crude oil fell by $1.02 per barrel within 5 minutes, to $66.74 per barrel. The USD/CHF rose by 0.0069 within 5 minutes, to 0.8198. The EUR/USD fell by more than 1.0% during the day, to 1.1365.

With the White House indicating that progress has been made in trade negotiations to reduce the comprehensive tariffs announced earlier this month, U.S. Treasury bonds and the U.S. dollar showed greater stability on Tuesday. Although the yield on the 10 - year Treasury bond remained almost unchanged, the yield on the 2 - year Treasury bond rose to 3.82% due to weak auction demand.

According to a U.S. Supreme Court ruling 90 years ago, the president has no right to fire Powell unless he can prove that the federal official has committed serious dereliction of duty or misconduct. Powell has said on many occasions that the president has no right to dismiss him, and he will not leave before the end of his term, which is due to end in 2026.

Earlier on Tuesday, the White House also defended Trump's remarks criticizing Powell, saying that the president "has the right to express his dissatisfaction with the Federal Reserve". Powell's analysis holds that tariffs could lead to a stagnation in economic growth and push up inflation, which would limit the Federal Reserve's room for further interest rate cuts. This view has angered Trump.

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