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Donald Trump has said he has “no intention” to fire US Federal Reserve Chairman Jay Powell, pulling him back from his historic conflict with top American central bankers and sending global stocks higher.
The president repeatedly attacked the Fed’s refusal to cut interest rates, believing last week that the central bank head could reject Powell before it ended in May 2026.
Trump reiterated his frustration that the Fed should cut borrowing costs in comments in an oval office on Tuesday, but he added:
Trump’s recent persistent criticism of Powell has rattled global markets and threatened the Fed’s independence.
Futures tracking the S&P 500 increased by 1.7%, while those with high-tech Nasdaq rose 1.9% on Wednesday, while the Stoxx Europe 600 rose 1.3%. Japan’s broad topics rose 1.7%, while Hong Kong’s Hansen rose 2.4%.
The dollar index rose 0.3%, extending the rebound from its three-year low, but its 10-year yield fell 0.06 percentage points to 4.34%. Haven’s asset Gold fell 2.4% after hitting a record high of $3,500 per troy ounce on Tuesday.
Investors said the president’s pledge not to dismiss Powell proved that there were members of his inner circle who recognized that the market valued the independence of major American institutions.
“This shows that there are some guardrails around this president,” said Dec Mullarkey, managing director of fund manager SLC Management. “I feel this [Treasury secretary Scott] Bescent’s touch,” he added.
“Obviously other people are talking about it.” [Trump] And explained that [firing Powell] It would have caused a lot of volatility. Bessent recognizes the need to maintain market integrity. ”
Powell has repeatedly said he will serve his full term as the Fed chair, and believed that his early termination would not be permitted under US law.
Investor concerns about his position rose after Kevin Hassett, director of the National Economic Council, said on Friday that he would “continue to study” the issue of Trump rejecting Powell.
The financial markets were sold on Monday after Trump attacked Powell as “Mr. Two Late” in a post on his true social platform.
US stocks and the dollar mostly regained losses on Tuesday after Bescent said the trade war with China was “unsustainable.” Trump also said he would sign a deal with China — something he said repeatedly — and tariffs would “fall significantly.”
The Fed had been on a clash course with Trump since shortly after he took office, but attacks from the White House have intensified since the president launched his “mutual tariffs” on April 2nd.
Interest rate setters, including Powell, have announced they will postpone interest rate cuts until they are convinced that Trump’s trade policies will not lead to a sustained rise in inflation.
The Fed Chairman and his colleagues also revealed concerns that Trump’s tariffs are increasing the prospect of lower growth and rising prices, weakening the economy previously mentioned by officials.
Trump addressed a society of truth last Thursday that Powell’s ending “didn’t come fast enough.”
Additional reports from George Steer and Peter Wells of New York and Arjun Neal Alim and William Sandland of Hong Kong
