But Powell’s determination to make the decision at his own time increased the president’s frustration. The White House and the Fed entered an open conflict that threatens to destabilize financial markets, according to several analysts.
“If I want him to leave, he will leave very fast, believe me,” Trump warned on Thursday in reference to Powell, whose second term concludes in May 2026.
For his part, the president of the Fed ruled out leaving his position in advance and this week recalled that the independence of the US Central Bank is “guaranteed by law.”
“Clearly, the fact that the president of the Fed has to talk about the issue means that they are seriously” White House threats, KPMG’s chief economist told AFP, Diane Swonk.
For most experts in the area, the general increase in tariffs promoted by Trump can, at least in the short term, decelerate the growth of the economy and increase prices. In addition, it will take away the objective of the Fed to achieve annual inflation of 2%, which would force high interest rates for longer.
“They will conflict,” said Wolfe Research chief economist Stephanie Roth. But he ruled out that the Fed “will succumb to political pressure.”
“They are not going to react because Trump posted a message demanding” lowering the rates, said the analyst. If they did “it would be the recipe for a disaster.”
Independence is “essential”
The majority of analysts agree that the Republican tycoon does not have the legal power to dismiss the Chief of the Fed or any of the main members of the monetary authority.
Created more than a century ago, the Fed was organized in such a way that it is protected from the political influences and the president’s nomination power is limited to some positions and requires the confirmation of the Senate.
“Independence is absolutely essential for Fed. Countries that do not have an independent central bank have remarkably weaker coins and notoriously higher interest rates,” Roth recalled.
A serious threat on the Fed can arrive through an ongoing judicial process before the Supreme Court. The Trump government wants to challenge a jurisprudence of 1935 that prevents the president of the United States from saying goodbye to independent government agencies.
But even, succeeding in such a cause, the White House must face a last peace judge: the bond market.
During the recent turbulence in the markets caused by the Trump tariff war, the returns of the US public debt shot and the dollar fell, indicating that investors could stop seeing the United States as the capital refuge that once was.
This unexpected movement prompted Trump to suspend an important part of tariffs, giving a respite to financial markets.
If investors perceive that the ability of the Fed to act independently against the progress of inflation, the American debt risk premium would rise, subject to the Trump administration to new pressures, is in doubt.
“The bond market cannot be controlled. And that is the moral of the story. That is why you want an independent Fed,” insisted analyst Diane Swonk.
With AFP information
