US President Donald Trump has reiterated his stance on the Federal Reserve, stating that he has no intention of firing Chairman Jerome Powell, while expressing optimism about improving trade relations with China and downgrading global growth forecasts.
US President Donald Trump has reiterated his stance on the Federal Reserve, stating that he has ‘no intention of firing’ Chairman Jerome Powell. This comes after repeated criticism from the president, who has called Powell ‘a major loser‘. However, Trump emphasized that he would like Powell to be more active in cutting interest rates.
Jerome Powell is an American economist and lawyer serving as the 16th Chairman of the Federal Reserve since February 2018.
A graduate of Princeton University and the University of Virginia Law School, Powell was a partner at the law firm Davis Polk & Wardwell before joining the Fed in 2005.
As Chairman, he has overseen monetary policy decisions affecting interest rates, inflation, and economic growth.
Trade Relations with China
Trump expressed optimism about improving trade relations with China, stating that he is ‘very nice’ in negotiations and tariffs will fall if there is a deal. He also noted that the current situation is unsustainable and that a de-escalation of the trade war with China is expected. US Treasury Secretary Scott Bessent reportedly echoed this sentiment, describing the current situation as unsustainable.
Global Economic Uncertainty
The remarks from Trump and his administration have led to market fluctuations. The S&P 500 ended Tuesday’s session up 2.5%, while the Nasdaq rose 2.7%. Investors had feared that pressure on Powell to lower interest rates could cause prices to rise at a time when trade tariffs are already seen boosting inflation.
Global economic uncertainty is caused by various factors, including trade wars, political instability, and climate change.
Trade wars between countries can lead to reduced exports and increased costs for businesses.
Political instability can result in volatile financial markets and decreased investor confidence.
Climate change poses a significant threat to global economic stability, with rising temperatures and extreme weather events affecting agricultural production and supply chains.
Global Growth Downgraded
The International Monetary Fund (IMF) recently downgraded its forecast for US economic growth this year, citing uncertainty caused by tariffs and trade tensions. The fund predicted a ‘significant slowdown’ in global growth due to the sharp increase in tariffs and uncertainty.
The World Bank has downgraded its global growth forecast, citing trade tensions and slowing economic activity.
In 2022, global GDP is expected to grow at a rate of 2.6%, down from 3% in 2021.
The slowdown is particularly pronounced in emerging markets, where growth is projected to decline by 0.5%.
The International Monetary Fund (IMF) has also reduced its forecast, attributing the downturn to weak investment and lower consumer spending.
US Dollar and Trade Tensions
The remarks from Trump have also had an impact on the US dollar. Most major Asian stock markets were higher on Wednesday as investors welcomed the latest comments, with Japan‘s Nikkei 225 index rising about 1.9% and mainland China’s Shanghai Composite down less than 0.1%. The Chinese government has not yet officially responded to the Trump administration’s statements.
US Tariffs and Global Trade
The US has imposed taxes of up to 145% on imports from China, leading to a blanket US tariff of 10% until July. China has hit back with a 125% tax on products from the US, vowing to ‘fight to the end.’ The Trump administration’s actions have triggered uncertainty about the global economy and led to turmoil in financial markets.
Powell’s Authority
It is unclear whether Trump has the authority to fire the Fed chair. No other US president has tried to do so. Powell was nominated by President Joe Biden for a second four-year term at the end of 2021.
