Trump says he has 'no intention' of firing Fed's Powell

Latest remarks come amid increasing concerns over future of Federal Reserve's independence

US Fed Chair Jerome Powell. Reuters

Donald Trump on Tuesday said he is not planning to fire US Federal Reserve chairman Jerome Powell, amid growing concerns over the president undermining the independence of the central bank.

“I have no intention of firing him,” Mr Trump told reporters in the Oval Office on Tuesday. But he added: “I would like to see him be a little more active in terms of his idea to lower interest rates.”

He has berated Mr Powell – who he nominated for Fed chair in 2017 – in the last week over his resistance to cut interest rates due to the uncertainty surrounding the economic outlook.

As recently as Monday, Mr Trump warned “there can be a slowing” of the US economy unless Mr Powell issues “pre-emptive rate cuts”, implicitly indicating that his tariffs would weaken the US economy. But Mr Trump's comments on Tuesday suggest a softer stance after turmoil in the bond market.

The yield on the 10-year Treasury was 4.4 per cent on Tuesday, while the US dollar index climbed slightly higher to 99.64 after slumping to a three-year low the day before.

Recent market volatility has come amid renewed concerns over the future of the Fed's independence.

Mr Trump's most recent tirade against Mr Powell, who he has called a "loser", came after the Fed chairman acknowledged tariffs could force the central bank to choose between taming inflation and maintaining full employment. He has also said the Fed is not rushing to cut interest rates because of economic uncertainty.

Last week, Mr Trump said Mr Powell would leave “if I ask him to”. “If I want him out, he’ll be out of there, real fast, believe me,” he said.

Mr Powell has maintained Mr Trump does not have the legal authority to fire him, and that he would not leave if asked. His term as Fed chairman expires in 2026.

Meanwhile, Minneapolis Fed president Neel Kashkari on Tuesday said the Fed's independence on monetary policy is the foundation for better economic results.

Mr Kashkari said it was too soon to judge the path on future interest rate decisions, a view largely shared by his Fed colleagues.