Trump Mulls Change of Heart on Firing Fed Chair Powell

1

This is not the first time Trump has voiced the notion of removing Powell. However, legal protections typically shield Federal Reserve officials from dismissal barring misconduct. Trump had recently stepped back from the idea but seems to be revisiting it as the Fed opts to keep rates steady, forecasting slower growth coupled with rising unemployment and inflation.

Fed Governor Chris Waller, mentioned as a possible candidate to succeed Powell, supports considering rate cuts soon but aligned with the Fed's recent decision to withhold changes for now. Neither Waller nor other key Board members have shown intent to challenge Powell's position directly.

Trump, who was partly elected on promises to curb inflation, has maintained tariff hikes that Powell suggests could contribute to rising consumer prices. With Powell's term nearing its end, Trump's choice of a successor is anticipated soon, especially after a recent Supreme Court ruling emphasized the Fed's unique status as a "quasi-private entity," reducing concerns over an abrupt removal of its chair.

The ongoing tension between Trump and Powell has significant implications for US monetary policy, particularly affecting businesses and consumers reliant on stable interest rates. Trump's push for lower rates aims to stimulate economic growth but poses risks of inflationary pressure, especially given existing tariff impacts on consumer prices.

Powell’s retention or replacement could reshape Fed policies, influencing both domestic and international economic landscapes. The Federal Reserve's decisions affect loan rates, investment returns, and broader economic stability, thereby impacting nearly all financial sectors.

The anticipation of Powell's replacement introduces potential policy shifts. Should Trump proceed with a new appointment, likely shifting toward candidates advocating for lower rates, the Federal Reserve's approach may significantly change. This environment adds unpredictability to financial markets, heightening attention on upcoming Fed meetings and Trump's subsequent nominations.

With economic indices pointing towards tighter labour markets and easing inflation, any forthcoming adjustments could weigh heavily on the Fed's trajectory in managing economic recovery. Watch for announcements around nominations and rate decisions in the coming months as critical indicators of future US financial policy.

Published:Saturday, 21st Jun 2025
Source: Paige Estritori

Share this news item:

Finance News

Clear

Investors Advised Against Overvalued Markets Amid Economic Uncertainty 18 Jul 2025: Paige Estritori In a market swayed by trade tensions and geopolitical uncertainties, investors are encouraged to remain cautious of inflated valuations. The mid-year outlook from Schroders warns against ignoring these issues, despite the market's surprising resilience to economic pressures. - read more

ASIC Penalises Two Licensees for Unregistered Financial Advice 17 Jul 2025: Paige Estritori The Australian Securities and Investments Commission (ASIC) has taken enforcement action against two financial planning licensees for permitting unregistered advisers to provide personal financial advice. This regulatory action involved Sky Money Pty Ltd and Smart Financial Capital Pty Ltd, who were each required to pay infringement notice penalties amounting to $31,300 in early July 2025. - read more

Unemployment Rate Rises as Australian Labour Market Cools 17 Jul 2025: Paige Estritori Australia's strong labour market showed signs of cooling in June, with the latest figures from the Australian Bureau of Statistics revealing an increase in the unemployment rate to 4.3 per cent, up from 4.1 per cent in May. This slowdown in employment growth, with only a modest increase of 2000 jobs, adds to the pressure on the Reserve Bank to consider future interest rate cuts. The Reserve Bank had previously held the official cash rate steady at 3. - read more

Australia's Unsustainable Financial Outlook Raises Concerns 16 Jul 2025: Paige Estritori Recent admissions from the Treasury reveal Australia's precarious financial situation, with significant implications for the nation’s economic stability. A report from credit ratings firm S&P last month highlighted that the combined budget deficits of Australia’s state and federal governments total $52 billion. Furthermore, the country's net debt has already surpassed 60% of GDP, showcasing a challenging fiscal scenario. - read more

RBA Proposes Ban on Card Payment Surcharges 15 Jul 2025: Paige Estritori The Reserve Bank of Australia (RBA) has proposed eliminating surcharges on debit and credit card transactions, a move that impacts all major card providers such as Mastercard, Visa, and eftpos. As revealed in a newly released consultation paper, the RBA cites the $1.2 billion annual cost to consumers, highlighting inefficiencies and advocating for a unified approach to card payments. - read more