Mr. Trump Says Fed Chairman Will 'Leave' In 8 Months

Mr. Trump called the Chairman of the Federal Reserve Mỹ (Fed) Jerome Powell a “fool” for keeping interest rates too high, while revealing that Mr. Powell would soon leave his position. “I think Mr. Powell has done very poorly, but he is also about to be replaced. In 8 months, he will be leaving,” U.S. President Donald Trump said, according to Reuters. In the past, Mr. Powell has repeatedly asserted that he will not resign early and that his term at the Fed will last until May 15, 2026. For many months, Mr. Trump has criticized the Fed Chair for keeping interest rates too high and has frequently mentioned the possibility of firing him. Nevertheless, Mr. Trump also stated that removing Mr. Powell is “unlikely to happen.” Recently, the White House has intensified its campaign to pressure Mr. Powell, while also launching a review of the Fed’s renovation of two buildings in Washington that the administration claims are too extravagant and may not be in compliance with the proper planning process. However, the Fed has vehemently denied these allegations. On July 22, ( local time ), U.S. Treasury Secretary Scott Bessent also reiterated the call for a “major internal investigation” into the Federal Reserve’s activities outside of monetary policy. “The Fed is increasingly expanding its operations beyond its core mission. That is why they are spending a lot of money,” Mr. Bessent said. In fact, economists warn that efforts to pressure the Fed to loosen monetary policy may backfire. Some analysts also believe that the continuous attacks by Trump’s administration on Mr. Powell are undermining confidence in the Fed’s ability to achieve its goals of price stability and maximizing employment. “Investors seem to agree that the risks to the independence of the Fed are increasing. If inflation continues to rise, it may make Fed officials even more hesitant to cut interest rates,” said economist Jan Hatzius of Goldman Sachs. Mr. Powell, along with other Fed officials, believes that long-term inflation expectations remain stable and they are closely monitoring short-term indicators, especially in the context of tariffs that could increase price pressures as businesses pass more costs onto consumers. On the other hand, Barclays economists believe that efforts to pressure the Fed to loosen monetary policy are not suitable for the macroeconomic conditions. In fact, this will backfire, leading to higher long-term interest rates and tighter monetary policy. Also on July 22, Mr. Trump continued to emphasize that interest rates should be at least 3 percentage points lower than the current level. The Federal Open Market Committee (FOMC) is almost certain to hold interest rates steady in the range of 4.25-4.5% at next week’s meeting.