President Donald Trump has stated he has “no intention of firing” Federal Reserve Chairman Jerome Powell, despite months of public criticism. Speaking from the Oval Office on Tuesday, Trump expressed dissatisfaction with the Fed’s cautious approach to interest rates but affirmed Powell’s position at the helm of the U.S. central bank.
Trump’s assurances came after heightened speculation last week when Kevin Hassett, director of the National Economic Council, revealed that the president was exploring the possibility of removing Powell. Trump’s recent criticisms, including branding Powell “a major loser,” had rattled financial markets, prompting sharp declines across stocks, bonds, and the dollar. His latest comments, however, appeared aimed at steadying investor nerves and restoring confidence in the Fed’s independence.
Trump Presses for Interest Rate Cuts
While confirming Powell’s job security, Trump made clear his continued frustration with the Federal Reserve’s monetary policy. He urged the central bank to be “a little more active” in cutting rates to boost economic growth, arguing that existing rates remain too high given the global slowdown and ongoing trade tensions.
The Fed, which reduced interest rates by a percentage point late last year, has yet to announce further cuts in 2025. Trump’s insistence on lower rates highlights his concern that high borrowing costs could undermine U.S. economic resilience, especially amid escalating trade disputes. Although it remains legally murky whether Trump could remove Powell, no U.S. president has previously attempted to fire a Fed chair, reinforcing the central bank’s traditional independence.
Optimism Over U.S.-China Trade Talks
Alongside remarks on monetary policy, Trump struck a cautiously upbeat tone on trade negotiations with China. He indicated that while tariffs could be lowered if a deal is reached, they would not be entirely eliminated. “We’ll be very nice in negotiations,” he said, suggesting a more conciliatory approach while maintaining leverage over Beijing.
Earlier in the day, U.S. Treasury Secretary Scott Bessent echoed this optimism, forecasting a “de-escalation” of the trade war. He described the current tariff environment as “unsustainable” for both economies. Donald’s comments were well-received by investors, who have been wary of the prolonged trade battle’s impact on global economic growth.
Markets Rally on Trump’s Soothing Tone
Financial markets responded positively to Trump’s remarks. On Wednesday, major Asian indices surged, with Japan’s Nikkei 225 rising 1.7% and Hong Kong’s Hang Seng index climbing 2.3%. Mainland China’s Shanghai Composite posted a modest gain of less than 0.1%.
In the U.S., Wall Street rebounded sharply on Tuesday, with the S&P 500 ending the session up 2.5% and the Nasdaq gaining 2.7%. Futures markets also pointed to a strong opening for U.S. stocks. Analysts noted that Trump’s softer rhetoric on both the Fed and China helped ease fears that had fueled recent market volatility, including concerns about rising inflation from tariffs and political pressure on monetary policy.
Global Growth Downgraded Amid Tariff Uncertainty
Despite the market rally, warnings about broader economic risks remain. On Tuesday, the International Monetary Fund (IMF) delivered a grim assessment of the global economic outlook, citing U.S.-China tensions and rising tariffs. The IMF downgraded its forecast for U.S. growth by the largest margin among advanced economies, predicting a “significant slowdown” if current trends continue.
Trump’s tariffs — which could climb as high as 245% on some Chinese goods — and China’s retaliatory duties of up to 125% have fueled fears of sustained trade disruption. Other nations are also facing new U.S. tariffs of 10% until July. As both sides dig in, the global economy faces heightened uncertainty, with the risk of prolonged instability unless a comprehensive trade agreement is reached.
