Explosive fight between Trump and Powell over monetary policy
in an economically weakened America, Donald Trump aspires to radical changes. For this, he carefully chooses his allies for the coming years. But some institutions, such as the Federal Reserve (Fed), are reluctant to bend in the face of their ambitions. Between monetary independence and pressure from the president, the relationship between Trump and Jerome Powell, the current head of the Fed, promises to be turbulent.
Donald Trump Confronts the Fed: Stalemate and Ambition
Donald Trump, the man who wants to save America with Bitcoin, has always been obsessed with: keep a firm grip on the levers of the American economy. And for him, the Fed is a key player he cannot ignore. Since his first mandate, openly criticizes the monetary policy led by Jerome Powellwhom he appointed to head the institution in 2018.
The ex-president blames the central bank not following instructionsespecially when it comes to cutting interest rates, a tool he sees as essential to support growth and financial markets. In response, Powell defendedindependence of the Fedrecalling that his decisions are based on economic analyses and not on political priorities.
This tension came to a head when Trump stated the possibility of firing Powella legally contested initiative. However, the former president insists: The president should make a statement. »
For Powell, the answer is clear: “ Our decisions are independent and nobody will dictate them. »
The US economy under the microscope of the Fed
Despite Trump’s criticism, Jerome Powell wanted to welcome resilience of the US economy. With a lowest unemployment rate in history 4.1% and massive growth, the United States continues to stand out among the major economic powers. However, many challenges remain.
Powell’s Economic Rating:
- GDP growth: twice as fast as in the Eurozone;
- Inflation: falling but still above 2% target;
- Labor market: inflationary pressure is decreasing due to moderate stabilization;
- Prime rates: adjusted cautiously, currently between 4.50% and 4.75%.
For Powell, maintaining balance is essential: stimulate growth without fanning the flames of inflation. However, Trump sees these elections as unnecessary obstacles to his economic ambitions. The Fed, for its part, remains steadfast in its mission to ensure financial stability regardless of political dictates.
Inflation and political tensions: an explosive cocktail
Inflation is one of the sinews of economic warfare. Under Powell, the Fed pledged to gradually reduce this phenomenon, but the results are slowly convincing everyonestarting with Trump. in October inflation rose to 2.6 percentwhich raised new criticism from the ex-president and concerns.
Trump believes more aggressive rate cuts could prevent unnecessary stress on markets. However, Powell remains cautious: “ A bumpy ride is expected. »
Political pressures are not helping. Trump wants quick action to seduce Wall Street and support his presidential ambitions.
But beyond the numbers, it is the very philosophy of economic management that stands against these two men. for Powell, stability takes precedence over flashes of brilliance. For Trump, the short-term wins, even if it means ignoring the warning signals from economists.
If he returns to the White House, Donald Trump has made no secret of his intention to fire Gary Gensler, the head of the SEC, and continue the standoff with Powell. The latter, although he had firm support, might have considered abandoning his post to avoid another open war. What happens next promises to be as unpredictable as Trump’s policies.
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The comments and opinions expressed in this article are solely those of the author and should not be considered investment advice. Before making any investment decision, do your own research.
