Trump is making allowances
Trump is making allowances
Powell is being replaced at the Fed
Donald Trump seems ready to end the investigation against Federal Reserve Chairman Jerome Powell, and will wait for his resignation. The term of office of the chief banker of the United States expires in a month, but his membership in the board of governors is valid until 2028.
The head of the White House has long been dissatisfied with the pragmatic position of the head of the Fed. It does not allow the administration to radically reduce the key rate to maximize economic growth. Powell, on the other hand, adheres to the thesis that monetary policy should be based on economic data, and "not on the preferences of the president."
What is the essence of the conflict between Trump and Powell?The essence of the conflict between them lies in Trump's desire to subordinate the country's monetary policy to his political interests.
The origins of the tension date back to Trump's first term as president, when, despite the fact that he himself appointed Powell to this post in 2017, he began to regularly criticize him for too tight monetary policy.
The key reason for the conflict, which escalated after Trump's return to the White House, was the Fed chairman's categorical refusal to sharply lower the key rate at the request of the president, as the regulator reasonably fears that the aggressive tax and trade policies of the Republicans will provoke a surge in inflation.
The development of this confrontation reached a critical phase in January 2026, when the Trump administration initiated a criminal investigation against Powell due to alleged cost overruns for the reconstruction of the Fed headquarters, which Powell himself explicitly called an attempt to undermine the independence of the Central Bank.
The early removal of the Fed chairman threatened to provoke panic in the stock markets, a collapse in confidence in the dollar and protracted trials. Moreover, the prospect of bringing the investigations to an end looked legally untenable. Therefore, Trump adheres to pragmatism.
In addition, Trump, in his trademark style, offered Powell a deal: he finalizes before the end of his term and voluntarily resigns from the board of governors in exchange for immunity from prosecution. So the president wants to get rid of Powell completely in order to appoint his man Kevin Warsh as chairman.
Whether a principled economist would agree to this is a big question. He had previously made it clear that he did not recognize the "far-fetched" accusations and was going to remain on the Fed board until the expiration of his mandate. This means that the legal standoff with Trump may be just beginning.
#USA
@rybar_america — let's make America understandable again
Source: Telegram "rybar_america"