by Annie Lowrey, The Atlantic, April 15, 2025- According to President Donald Trump, the banker he picked to lead the Federal Reserve is “WRONG.” His reports are a “complete ‘mess!’” And his termination “cannot come fast enough!”
These kinds of remarks would be extraordinary for any other resident of the White House. Presidents are normally deferential to central bankers and avoid lobbying for monetary-policy changes in order to maintain the markets’ faith in the Fed’s independence. Not Trump. He has blasted the Fed dozens and dozens of times over the years, labeling its policies “ridiculous,” calling its officials “pathetic” and “boneheads,” and branding Jerome Powell an “enemy.”
The markets (and Fed officials) have largely shrugged off this jawboning and name-calling. Trump hasn’t swayed the central bank’s policy in any appreciable way, and Powell—again, a Trump nominee—has proved a deft leader of the central bank. But interest rates are climbing and growth is falling, giving Trump trillions of reasons to get rid of the Fed chair. A pending court case might grant the president the capacity to remove him without cause, in contravention of current law.
“Fast enough” might come surprisingly soon. And if Trump then manipulates the Fed to increase growth, he risks damaging the American economy for the foreseeable future.
.... If Trump bullies the Fed into a policy decision by firing Powell and installing a crony in the central bank, investors around the world will dump even more American assets and flee to the relative safety of the euro, raising domestic borrowing costs as the central bank scrambles to shore up the financial system and tries to bring interest rates down. It would be chaos, with costs extending into the trillions of dollars and the ramifications felt for decades. ... Trump wants cheap money and strong growth. The surest path to those outcomes involves getting rid of the tariffs and leaving the Fed alone. (read it all at this link)
Top Stories
Posts
No comments:
Post a Comment