The spirits seemed to have calmed down during the Easter weekend. It is not the case and the tension was reashed between Donald Trump and Jerome Powell on the occasion of the last monetary meeting of the Fed this week. On this occasion, the Federal Reserve has unanimously decided to extend the status quo in its rates, saying that it cannot predict where the US economy is going, facing the customs tasks imposed by the US president.
There are “so many uncertainties” about the repercussions of these new imports on imports that the Fed prefers not to move its rates at this time, said President Jerome Powell at a press conference on Wednesday. The words that have revived the anger of the White House tenant who called the head of the “fool” fed in his social network of truth.
A few hours earlier, Jerome Powell had assured a press conference that repeated criticism of the US president “did not affect our work at all.” Because in reality several months have passed since Donald Trump is publicly attacking the president of the Fed. A tension that goes back to the Central Bank that goes back even to the first mandate of the US president.
History of Trump’s first term
During his first mandate, Donald Trump had repeatedly expressed his disagreement with the Fed decisions in terms of interest rate, urging that the economy reluctance. The US president had appointed Jerome Powell as head of the Fed during his first term in 2018, but today accuses him of politicizing the US central bank. He was renewed at the head of the Fed in 2021 by Joe Biden for a second mandate. Donald Trump’s return at the head of the political scene caused criticism to express more than five years before.
Last August, in the middle of the electoral campaign, Donald Trump was already threatening the independence of the agency, suggesting that the White House could say regarding monetary policy. Once elected, the US president tried to guide the country’s monetary policy. Only three weeks after its inauguration, he estimated that Fed’s interest rates should fall quickly to support the customs tasks that he wishes to impose on products that enter the United States.
The previous day, the president of the monetary institution, Jerome Powell, indicated during his average hearing of years before the American senators that he did not see “urgency” to reduce guide rates to the extent that most of the indicators were green. Each of the two already camped in diametrically opposite positions.
Increased pressure after “Liberation Day”
As Donald Trump’s ads multiply over customs duties, Jerome Powell told him about a “high level of uncertainties” faced by the Fed that can “expect more clarity” on the reforms initiated by the new government before moving its rates. But the US president maintains his pressure on the monetary institution that is addressed in these terms on March 19, even in his social network of truth: “Do whatever is necessary.”
Two weeks later, Donald Trump presented the list of customs duties “reciprocal” that he intended to apply to the commercial partners of the United States. Seeing the next day, he pressed Jerome Powell again to reduce Fed’s interest rates, believing that there has already been significant progress in inflation since his return to power in January.
“It would be the perfect time for Fed President Jerome Powell to be lower interest rates,” he wrote on his real social platform. He still acts with delay, but now he could change his image, and quickly, he added. Energy prices have fallen, (…) Even eggs have fallen. “This little music from a Fed that acts out of time, late, will become one of the president’s leitmotifs.
But at the same time, the president of the FED prevailed that customs duties would probably generate less growth, more inflation and more unemployment in the United States. “It is clear that imported products will be significantly more extensive than expected,” he said during a speech on April 4. The “economic consequences” will probably be “(more extensive than expected), he adds.
Threatening
In the days that followed, the commercial war has increased, particularly due to the Chinese response that is organized. What place to the Fed of a “complicated situation in which our two objectives are in tension” according to Jerome Powell, which then evokes the possibility of “persistent inflationary effects.” This time, Donald Trump crosses a course in his response to the head of the monetary institution that he considers “too slow” to reduce rates.
The latter should “have had to reduce interest rates for a long time, such as the ECB,” added the US president, encouraging Jerome Powell to “do it now.” A few hours later, Donald Trump was taken again from the president of the American Central Bank of the Oval Office, saying: “I’m not happy with him. I let him know and if I want him to leave, he will leave quickly, believe me.” The director of the National Economic Council Kevin Hasett even confirms that the president and his team look at the issue.
Powell discards any early start
However, the US president in fact does not have the power to read the patterns of the Fed directly. To try to eliminate Jerome Powell, Donald Trump should begin a long procedure and demonstrate that the latter has committed a serious failure. If it is not uncommon for US presidents and Fed patterns to oppose monetary policy to follow, any attempt to fire Jerome Powell of their functions would be unknown in the contemporary history of the United States. The interested party declared in early April that it intended to “remain in office until the end of (its) mandate” in 2026, then recalled a few days after the independence of the institution was “guaranteed by law.”
On April 22, Donald Trump Retropedale and ensures that “he does not intend to return the Fed Chief, who seemed to testify a desire for appeasement after his virulent criticisms against Jerome Powell had financial markets.” I would like to see it a little more active “in the fall rates, however, the president repeats.
Source: BFM TV
