The tension is always higher between Donald Trump e Jerome Powell. Today the US President has it accused of being “too slow” in cutting rates even assuming that it could be “fired”. But the sparks between the two are not new: Jerome Powell according to the observers, was already in the balance at the time of the return of Trump at the White house. So much so that in a press conference, in the aftermath of the elections, when they asked him what he had done if the new president Donald Trump He asked him to resign, Lapidary replied: “I think not,” said the central banker.
Now after the last stoccata of the American president, the financial world continues to wonder What will happen at the top of the Fed.
Powell – appointed by Trump in 2017 and confirmed by Biden For a second term in May 2022 – it is not well seen in Republican environments and its mandate expires in 2026. E Trump At this point he could hurry his release. Yet, in an interview with a little more than a year ago a Bloomberg Businessweekthe American president said about the president of the Fed: “I would allow him to complete his mandate, especially if I thought he is doing the right thing”. Then, in February 2024, talking to Fox Newshe had called him “a politician” because by cutting the rates, he would have favored the Democrats in the electoral race. In recent months, in another circumstance, speaking with journalists in his estate Mar-a-lag a Palm Beachin Florida, Trump still expressed doubts: “I was very successful. And I think I have a better instinct than that of those who, in many cases, are part of the Federal Reserve – or the President “.
Pressure on the Fed
The fact is that despite having appointed him precisely, in 2019 Trump He has never digested some decisions of the central banker who, in his opinion, is too prudent in cutting rates. At the time, the new president led a clear campaign of pressure on the Fedurging the central bank to “exploit the victory” of such a strong economy e attacking Powell as “unwary”.
Even after the Fedin August 2019, actually began to lower the rates, the complaints of Trump they did not cease. “My only question is: who is the greatest enemy of our economy, Jay Powell or the president Xi? “, wrote up Twitter. Powell he rejected these pressures, and in an audition to Senate Of July 2019 he sentenced: “We will always do our work in a objective way, based on the data, with transparency, and we will do what we think is right for the American economy”. Just a year ago, the Wall Street Journal an article that described in detail a plan of the allies of Trump To smooth the independence of the Fed and allow the president to be involved in interest rates decisions. The managers of the campaign of Trump Chris LaCivita e Susie Wiles However, they affirmed that the relationship should not have been considered “official”.
Independence of the Fed
For his part, Powell has long claimed that he and other officials of the Fed They do not take into account politics when they decide on monetary policy. During his mandate, Powell led a strong economy later shock from the economic recession due to Covid. When the pandemic ended, the United States They found themselves facing stars, with a peak of about 9% in the summer of 2022.
However, Observers claim that over time Powell managed to obtain a “enormous result” and that is to “control inflation without entering the recession”. On the other hand, the relations between the White house And the central bank have not always been serene. For example, in 1965, the president Lyndon B. Johnson he would have convened the then president of the Fed William McChesney Martin in his rach in Texas And he would have pushed him against a wall after the decision to increase interest rates. But it is also true, and the presidents also know that one Independent central bank is essential To collect the benefits of economic and financial stability.