"Trump Reconsiders Ousting Fed Chair Powell Amid Stock Market Rally"

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Trump Backs Off Threat to Fire Fed Chair Powell Amid Market Rally

United States President Donald Trump has stepped back from his threat to remove Federal Reserve Chair Jerome Powell, following days of market volatility sparked by his criticism of the central bank. Trump's remarks on Tuesday signaled a shift in tone, aiming to calm markets after his earlier attacks had sent stocks and the U.S. dollar tumbling.

Speaking to reporters at the White House, Trump clarified, “The press runs away with things. I have no intention of firing him.” Although he continued to press for lower interest rates, he struck a less combative note. “I would like to see him be a little more active in terms of his idea to lower interest rates. This is the perfect time to lower interest rates. If he doesn’t, is it the end? No, it’s not.”

Following his remarks, U.S. stock futures climbed, with contracts tied to the S&P 500 and Nasdaq-100 gaining more than 1.7 percent and 1.9 percent, respectively. The U.S. dollar also strengthened, rising over 1 percent against major global currencies.

Markets had already begun recovering earlier on Tuesday, buoyed by statements from Treasury Secretary Scott Bessent, who told investors that a trade war with China was “unsustainable.” He expressed optimism that a de-escalation and eventual agreement with Beijing were within reach. White House Press Secretary Karoline Leavitt added that the administration was “setting the stage for a deal with China” and had made solid progress toward that goal.

The renewed optimism sent the S&P 500 up more than 2.5 percent by the market close, while the Nasdaq jumped over 2.7 percent. Asian markets responded positively as well, with Japan’s Nikkei 225 and South Korea’s KOSPI climbing around 2 percent and 1 percent, respectively, in early Wednesday trading.

The improved market sentiment comes amid heightened tensions between the U.S. and China, triggered by Trump's imposition of a 145 percent tariff on most Chinese imports. China responded with retaliatory duties of 125 percent on American goods. On Tuesday, Trump acknowledged the severity of the trade measures but suggested relief was on the horizon. “The tariff on China is very high,” he said, “and it will come down substantially.”

Trump’s ongoing feud with Powell had recently intensified. On Monday, Trump called Powell a “major loser” and “Mr Too Late” for not lowering interest rates, comments that contributed to one of the steepest market declines of the year. Last week, Trump even suggested Powell’s removal “cannot come fast enough,” while his economic adviser Kevin Hassett confirmed the administration was exploring legal avenues to dismiss him.

Despite the pressure, Powell—nominated by Trump in 2017 and reappointed by former President Joe Biden—has maintained that he would not resign if asked. Legal precedent, established by the U.S. Supreme Court, holds that the heads of independent agencies like the Federal Reserve can only be removed for “cause.”

Experts warn that any move to oust Powell prematurely could shake investor confidence. “I would expect to see a dramatic fall in the stock and bond markets,” said Erasmus Kersting, economics professor at Villanova University. “The ‘sell USA’ strategy would become mainstream. This would also have an impact on the real economy, leading to a recession.”