Powell vs. Trump: President Backs Down on Plans to Fire Fed Chairman

US President Donald Trump said on Wednesday that he has no plans to fire Fed Chairman Jerome Powell, denying earlier reports that the White House is searching for a new Federal Reserve chairman.

The fact that the US administration has begun the formal process of searching for Powell's successor was announced on Tuesday by US Finance Secretary Scott Bessent in an interview with Bloomberg.

“Such reports are not true,” Trump said on Wednesday.

"I'm not ruling anything out, but I think it's highly unlikely. Unless Powell has to leave because of fraud," he added.

The US president thus responded to accusations against Powell made by some Republican politicians. Their criticism concerns the $2.5 billion renovation of the Fed's main building in Washington.

Trump has repeatedly insulted Powell and threatened to fire him, and in early July, he told reporters that the Fed chairman was a "moron." He added that he had two or three candidates who could replace him. The Fed chairman's term ends in May 2026.

Trump is trying to force Powell to lower interest rates to stimulate the economy. On Monday, the president again criticized the Fed chairman and said interest rates should be lower by 1%.

CBS News reported that Trump asked Republican lawmakers whether he should fire Powell, and several people in the audience said he suggested he would. The meeting with members of the House of Representatives took place Tuesday evening in the Oval Office of the White House.

The US dollar reacted sharply to Bloomberg's report, depreciating against the euro by 1.3% in an hour, from 1.1561 to 1.172. Such a move in such a short period of time is unusual in the currency market. After Trump's denial, the dollar began to regain ground against the euro, but has so far only recovered half of its losses. Just before 7 p.m., the euro-dollar exchange rate was at 1.1643.

As a result of the weakening of the dollar on the international market, the zloty also gained against the American currency, strengthening by 0.8% to the level of PLN 3.65.

While the US stock markets didn't react much to Trump's words (the S&P 500 fell 0.1%, the Dow Jones Industrial Average rose 0.2%, and the Nasdaq Comp. lost 0.15%), the bond market reacted even more strongly. Short-term bond yields plummeted, while long-term bond yields rose.

The next meeting of the Reserve Bank is scheduled for July 29-30. (PAP Biznes)

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