The new US government is in office. Will the Fed chairman step down? Trump said: Powell will not be fired.

Trump clearly stated: no plans to replace Powell

After the dust settled in the US presidential election, Trump clearly stated in a recent TV interview that he would not remove the current Federal Reserve Chairman Jerome Powell from his position. This interview not only quelled speculation about potential changes in the leadership of the Federal Reserve, but also revealed Trump's subtle attitude towards monetary policy.

Trump said, 'No, I don't think I would fire him. I think if I told him to leave, he would leave. But if I asked him to resign, he might not.' This conversation revealed Trump's subtle respect for Powell and his seemingly ambiguous desire for control. In an interview with NBC's Kristen Welker, Trump's attitude sharply contrasts with his fierce rhetoric during the campaign.

Looking back at Trump's first term, he publicly criticized Powell's Intrerest Rate policy multiple times, believing that the Fed's Intrerest Rate adjustments suppressed economic growth. In 2018, Trump even considered directly firing Powell, but ultimately did not follow through. At that time, legal scholars pointed out that under the Federal Reserve Act, it is not easy to dismiss the Fed Chair, and it can only be achieved if there is evidence of serious misconduct or abuse of power.

Image source: NBC Trump's interview with NBC reporter Kristen Welker

The political struggles and independence of the Federal Reserve

The influence of the US President on the Federal Reserve is actually quite limited. The Federal Reserve Act stipulates that the Chairman of the Federal Reserve can only be removed from office due to serious misconduct or abuse of power, not simply due to policy differences. Powell's current term as Chairman will continue until 2026, and his term as a member of the Federal Reserve Board has been extended until 2028, which means that it is actually difficult for Trump to directly replace him.

In the next four years, Trump does have a chance to appoint at least two members of the Federal Reserve Board, including the position that will be vacant in January 2026. Although the Republican Party has a majority in the Senate, which favors Trump's appointments, the decision-making mechanism of the Federal Reserve is still quite decentralized. The independent appointment of the presidents of the 12 regional banks further limits the president's direct control over monetary policy.

Trump has publicly stated that he believes the president should have more influence on monetary policy. In an interview with Bloomberg, he said, "I think I have the right to say 'I think you should raise or lower it a little bit'. I don't think I should be allowed to give direct orders, but I think I should be able to comment." These remarks indicate that although Trump is eager to influence monetary policy, he is also aware of the limitations of direct intervention.

Maintaining independent institutions and policy stability

Powell insists that the Fed must maintain a non-political stance and emphasizes that "there is no doubt that the Fed must remain politically neutral." Although in reality, central bank operations are often difficult to completely depoliticize, maintaining the professionalism and independence of decision-making is key to maintaining confidence in the financial market.

Economist Peter Conti-Brown believes that the Federal Reserve is a "politically charged institution," but he emphasizes the important distinction between politics and partisan politics. Central Bank decisions typically reflect a balance of longer-term interests rather than advocating for a single political stance.

Trump's statement this time shows that he may have understood that excessive intervention may backfire. In the complex issues of inflation and Interest Rate adjustments, it may be wiser to maintain respect for professional Financial Institution. This also indicates that over the next four years, there may be a delicate but relatively stable interaction between the Federal Reserve and the White House.

Domestic and international tariff layout, Trump cannot promise price stability

Apart from the Federal Reserve issue, Trump once again proposed his core economic policy: imposing tariffs on major U.S. trading partners to protect domestic manufacturing and employment. However, when faced with the potential rise in prices and the impact on consumer interests, he candidly admitted that he could not make any guarantees: 'I cannot guarantee tomorrow, I cannot guarantee the future.' This statement reflects the complexity of the new government's policy implementation, which may cater to some industry demands, but could affect the prices of imported goods and consequently impact consumers.

Image source: NBC. Regarding the tariff issue, Trump frankly stated that he cannot make any promises: "I can't guarantee tomorrow, I can't guarantee the future."

Taking a comprehensive view of the situation, Trump unexpectedly showed tolerance towards Powell, which may indicate that the new government hopes to maintain a delicate balance between monetary and fiscal policies. The incoming government is facing global trade pressures, inflationary pressures, and economic uncertainty. How to properly utilize the Fed's professional judgment and maintain financial market stability will test the leader's patience and wisdom. For the market, investors, and the public, the independence of the Central Bank, policy transparency, and the government's respect for professional industries are still key factors in whether the U.S. economic governance can move forward steadily.

"The new US government takes office, will the Federal Reserve Chairman step down? Trump stated: Powell will not be fired." This article was first published in "encryption city".