President walks back threats amid market volatility, but pressure to cut rates continues
President Donald Trump said Tuesday he has “no intention” of firing Federal Reserve Chair Jerome Powell before the end of his term in May 2026, walking back days of escalating threats that had rattled global markets and prompted fresh scrutiny of the Fed’s independence.
“None whatsoever,” Trump told reporters in the Oval Office when asked if he planned to remove Powell. “Never did.”
The remark marked a sharp reversal from recent statements, including a declaration last week that “if I want him out of there, he’ll be out real fast,” and a social media post branding Powell a “major loser.” Those comments had fueled speculation that Trump was considering an unprecedented move to oust the central bank chief—a move many economists warned could spark a financial crisis.
Following Trump’s latest statement, US stock futures surged across major indexes, extending a broader rebound after Monday’s tariff-fueled sell-off.
Markets relieved, but pressure on Fed remains
Trump’s clarification brought a measure of stability to financial markets, which had reacted with alarm to the prospect of political interference at the Fed. The S&P 500 rose 2.5%, and the Nasdaq climbed 2.7% on Tuesday, buoyed by both Trump’s comments and optimism over a possible thaw in the US-China trade war.
Despite softening his stance on Powell’s job security, Trump maintained pressure on the Fed to act. “I would like to see him be a little more active in terms of his idea to lower interest rates,” he said. “This is a perfect time to lower interest rates.”
Trump has long argued that the Fed should slash rates to stimulate growth and offset the impact of his tariff policy, which has introduced inflationary pressures and disrupted global trade. Powell, meanwhile, has warned against cutting rates too quickly, citing the need to maintain inflation expectations and preserve policy credibility.
Central bank independence under strain
The president’s attacks on Powell have drawn sharp criticism from economists, former Fed officials, and market analysts, who view the Fed’s independence as a cornerstone of US financial stability. Any direct attempt to remove the Fed chair could undermine confidence in monetary policy and trigger a capital flight from US assets, analysts say.
“You don’t mess with central bank independence lightly—especially not in today’s circumstances,” wrote one economist. “If loose monetary policy were thrown into an already unstable inflationary and tariff mix, the dollar would fall further, the flight from US assets would accelerate, and long-term borrowing costs would rise.”
Others noted that even if Powell were removed, his replacement would still need to be confirmed and would hold only one vote on the rate-setting committee, limiting their ability to unilaterally influence policy. In such a scenario, Trump might be forced to overhaul the entire board—an outcome some warn could turn the Fed into a politicised body and sow deeper market chaos.
Still, the episode has raised broader questions about the future of central bank leadership in an increasingly polarised political climate. As economist Dario Perkins quipped on social media, “Given the overt pressure coming from this administration, who would want to be the next Fed chair anyway?”
