Trump now says it's 'highly unlikely' he would fire Fed Chair Jerome Powell after suggesting otherwise

In a major U-turn, US President Donald Trump on Wednesday (July 16) said it’s “highly unlikely” he would fire Federal Reserve Chair Jerome Powell, marking a shift from comments he made just a day earlier during a private meeting with lawmakers where he hinted at wanting Powell gone.

The conflicting signals reflect the administration’s ongoing efforts to pressure Powell, whom Trump has openly expressed a desire to see removed from his role, though he seems hesitant to take the drastic step of firing him.

When reporters in the Oval Office asked if he had entirely ruled out dismissing Powell, Trump replied that he never rules anything out but emphasised it was “highly unlikely.”

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White House mulls inspection of Federal Reserve HQ as Trump vs Powell feud intensifies Trump expected to fire Federal Reserve Chair Jerome Powell soon after lawmakers' support

He added a key condition: “Unless he has to leave for fraud.”

What was reported earlier?

The New York Times reported that Trump showed a group of Republican lawmakers a draft of a letter firing Powell and asked them if he should go ahead with it. Sources said that he indicated in the meeting that he wanted to go ahead with firing Powell.

Separately, Bloomberg reported a White House official as saying that Trump is likely to fire Powell soon and discussed the matter with Republican lawmakers.

For months,  Trump has been trashing Powell for not cutting interest rates to his liking. On his part, Powell has insisted that the Fed would cut the interest rate at an appropriate time on the basis of economic metrics and would not follow political directives. Any decision to fire Trump will likely disrupt the markets and shake faith in the US economy.

In its history of more than a century, no Chair of the Federal Reserve has been fired by any president. The independence of the Federal Reserve in setting the monetary policy of the country irrespective of the prevailing political environment is the bedrock of the central bank. Undoing the independence could  disrupt the markets and set the stage for disastrous monetary policy that prioritises the president's whims and fancies and not economic prudence.

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