Trump "changed his tune": no plans to fire Powell, now is the perfect time for rate cuts, US stocks surged after hours.

When asked if he confirmed that he was not seeking to remove Powell from office, Trump replied in the Oval Office: “Absolutely not, never.”

Written by: Zhao Yuhe

Source: Wall Street Journal

U.S. President Trump, who had previously criticized Federal Reserve Chairman Powell for failing to cut interest rates quickly and even threatened to fire him, stated on Tuesday that although he remains dissatisfied with the Fed’s failure to lower rates more swiftly, he has no intention of firing Powell.

When asked whether he confirmed that he was not seeking to remove Powell from office, Trump replied in the White House Oval Office: “Absolutely not, never.”

“This is just media gossip. No, I have no intention of firing him. I just hope he can be more proactive regarding the interest rate cut.”

“If he doesn’t do this, will it be the end of the world? No. But it is indeed a suitable time now. In any case, I have no intention of firing him.”

However, Trump reiterated his criticism of Powell.

“We believe that now is an excellent time to lower interest rates and hope that our chairman acts either ahead of or on time, rather than lagging behind the situation.”

In the days leading up to this, Trump had been pressuring Powell to cut interest rates. Just on Monday, Trump referred to Powell as a “complete loser” and implied that the previous Federal Reserve’s rate cuts were intended to help former President Biden.

Last week, Trump stated that he could not wait to see Powell “fired” and insisted that if he tried to fire him, Powell would walk away. White House National Economic Council Director Kevin Hassett told reporters last Friday that Trump was considering whether he had the authority to dismiss Powell, after the president had repeatedly criticized the Federal Reserve on social media and in public speeches.

In addition, before the European Central Bank lowered the benchmark interest rate by 0.25 percentage points to 2.25% last week, Trump had vehemently criticized Powell, repeatedly complaining that the pace of the Federal Reserve’s interest rate cuts was not fast enough. Trump referred to Powell as a “total disaster” and stated, “If I wanted him out, he would be gone quickly,” urging for an immediate rate cut, which raised concerns about his potential interference with the independence of the central bank.

Trump’s shift in attitude calms market sentiment, US stocks rise after hours

Analysis suggests that this statement aims to calm market tensions and signifies a clear shift in Trump’s attitude. Previously, he had intensified his criticism of Powell and at one point refused to rule out the possibility of taking unprecedented measures, including his dismissal, which caused market fluctuations.

On Monday, as Trump continued to harshly criticize Powell and even threatened to fire him, U.S. stocks, bonds, and the dollar all fell, leading to a “triple kill” of stocks, currency, and bonds. Gold and safe-haven currencies like the Swiss franc soared, with gold prices hitting 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% in after-hours trading, and Apple increased by more than 2.7%. Brent crude oil fell by $1.02 per barrel within 5 minutes, reporting at $66.74 per barrel. The USD/CHF rose by 0.0069 within 5 minutes, reporting at 0.8198. The EUR/USD fell by more than 1.0% during the day, reporting at 1.1365.

As the White House indicated progress in trade negotiations aimed at reducing the comprehensive tariffs announced earlier this month, U.S. Treasury bonds and the dollar showed greater stability on Tuesday. Although the 10-year Treasury yield saw little fluctuation, the 2-year yield rose to 3.82% due to weak auction demand.

According to a U.S. Supreme Court ruling from 90 years ago, the president has no authority to dismiss Powell unless he can prove serious misconduct or malfeasance by federal officials. Powell has repeatedly stated that the president does not have the authority to remove him, and he will not leave before the end of his term, which will conclude in 2026.

The White House defended Trump’s criticism of Powell’s remarks earlier on Tuesday, stating that the president “has the right to express dissatisfaction with the Federal Reserve.” Powell’s analysis suggests that tariffs could lead to a stagnation in economic growth and increase inflation, which would limit the Federal Reserve’s room for further rate cuts, a viewpoint that infuriated Trump.