President Donald Trump has set back the threat of firing the head of the US Federal Reserve after broadside urged the stock market and the dollar to enter the central bank boss.
Trump’s comments on Tuesday appeared to rule out an impending plan to remove Federal Reserve Chairman Jerome Powell, who repeatedly criticized the US president for not moving fast to lower interest rates.
“The press is running away with things. I’m not going to fire him,” Trump told White House reporters.
“I hope he’s a little more aggressive in terms of his idea of lowering interest rates. This is the best time to cut interest rates. Otherwise, is it the end? No, it’s not.”
US stock futures, trading outside normal market hours, have skyrocketed following Trump’s comments, with contracts linked to the benchmark S&P 500 and high-tech heavy NASDAQ-100s up over 1.70% and 1.90%, respectively.
The US dollar rose more than 1% against major currencies.
Wall Street met early on Tuesday after U.S. Treasury Secretary Scott Bescent told the Investors Conference that the trade war with China was “unsustainable.”
Following Bescent’s remarks, White House spokesman Caroline Leavitt said the Trump administration is “setting the stage for deals with China” and “doing very well.”
The S&P 500 closed more than 2.5%, while Nasdaq rose more than 2.7%.
Asian markets rose on Wednesday, with Japan’s Japan 225 and Korea’s Kospi increasing by about 2% and 1% respectively in early trading, respectively.
The US and China are locked in an effective trade embargo after Trump imposes 145% tariffs on most Chinese products and China has retaliated to a 125% obligation on US exports.
Trump on Tuesday admitted that China’s tariffs were “very high” and said the rate would be “a massive drop.”
Trump’s repeated attacks on Powell have hampered surprising financial markets in light of the overwhelming economic consensus that Federal Reserve independence is important to the health of the US economy.
Wall Street suffered some of the sharpest losses of the year on Monday after Trump branded Powell as a “major loser” and “Mr. Too late.”
Trump’s comments came last week after Powell’s ending declared “it can’t come fast enough.” His top economic adviser, Kevin Hassett, said the administration is studying his potential for removal.
The Federal Reserve, which last cut its benchmark rate in December, is paying attention to lowering borrowing costs in the near future amid concerns that Trump’s drastic tariffs will blow out inflation.
Trump dismissed concerns that his trade war would lead to higher prices, contrary to the views of most economists, and argued that a cautious central bank stance risked slowing the economy.
Powell, who was appointed by Trump in 2017 and tapped for former US President Joe Biden to serve another four-year term, said he would not resign if asked, and that he could only be rejected for fraud.
Heads of independent federal agencies, such as the Federal Reserve, can only be removed for “cause” under legal precedents set by the U.S. Supreme Court, but the Trump administration is challenging the norm in court in cases involving the Merit System Protection Commission and the National Labor Relations Commission.
The move to remove Powell before the end of his term could send a shockwave through financial markets, given the long-standing expectations that the Federal Reserve should free its decision from political considerations.
“We expect a dramatic decline in the inventory and bond markets,” Erasmus Carsting, an economics professor at Villanova University in Villanova, Pennsylvania, told Al Jazeera.
“The ‘Sell USA’ strategy will become mainstream. This also affects the real economy, leading to a recession. ”
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