Name: Trump again floats firing Fed Chair Powell before his term expires
Uploaded: 2025-12-29T23:27:42.828Z
Duration: 4 min 56 s
Description: At a news conference on Monday, President Trump again stated his desire to fire Federal Reserve Chair Jerome Powell, whose term expires in May.

At a news conference on Monday, President Trump again stated his desire to fire Federal Reserve Chair Jerome Powell, whose term expires in May.

Washington

President Trump has once again indicated that he may consider firing Federal Reserve Chair Jerome Powell before Powell's term expires in May, although he does not have the authority to do so. This renewed rhetoric has sparked discussion about the importance of central bank independence and the potential impact on investor confidence.

As speculation grows over Powell's successor, Trump has floated several candidates, including Kevin Warsh and Kevin Hassett, while emphasizing his desire for continued interest rate cuts. Economic analysts note that the outcome could influence both U.S. and global markets, especially as inflation remains above the Fed's 2% target and labor market conditions show signs of weakening.

Trump again floats firing Fed Chair Powell before his term expires

The economy was one of the biggest stories throughout the year, and 2026 is looking to be more of the same. Jerome Powell's term as Fed Reserve Chair expires in May, and while some contenders to replace him have been floated, President Trump has made clear he wants whomever the next head of the central bank is to continue to cut interest rates. But on Face the Nation this weekend, Makeup America CEO Brian Moynihan explained why he thinks in supporting the Fed remains independent from politics. The idea that we are like hanging on the thread by the Fed moving rates 25 basis points, it seems to me we've gotten out of whack. And so we've got to get, since the financial crisis, the Fed had a big role in stabilizing the economy. That's what they're supposed to do. That went away a number of years ago. It came back a little bit in COVID. They're a lender of last resort. They're there to stabilize markets and price. But other than that, you shouldn't know they exist, quite frankly. You don't worry about all this, you know, hand wringing of political interference with the Fed. It wants that new position. The market is a will punish people if we don't have an independent Fed and everybody knows that. Independent business correspondent Erin Delmore joins us now. What do you make of those comments juxtaposed with what the president said today again, which is basically how foolish Jerome Powell is saying that while his term is up soon, he may still choose to fire him, though he doesn't have the authority to do so. Right. Well, he did tease just now in his comments. I'm thinking about it when talking about firing Jerome Powell. Now, months ago, when he first started putting that line forward, it did send a chill over investors and businesses. But now people have seen months pass and they've seen that President Trump doesn't seem inclined to fire Jerome Powell. But make no mistake, Lindsay, the tension is there. Now, Jerome Powell is the Fed chair. And actually, President Trump nominated him and then President Biden kept him in place. He is a famously apolitical guy to the extent that he wears a purple tie in every single public appearance he makes. He doesn't want to seem partisan. Red for Republicans, blue for Democrats. He's largely tried to stay out of the fray, but it's just not possible now with the conversation about who will be his successor. Now, originally, President Trump was floating five different names, names for that. Two current Fed governors, one former Fed governor, a CEO of BlackRock, a big company here. And he was also talking about his National Economic Council chair. And that's Kevin Hassett. So he said he's leaning toward the two Kevins, Kevin Warsh, former Fed governor, and Kevin Hassett on his own economics team. But we don't know who it will be yet. That said, an independent Fed is of importance to the U.S. and also to countries around the world because so many countries peg their own currency on the strength of the U.S. So if the choice is Kevin Hassett or somebody who's very loyal to the president, will that spook investors? We don't know yet. And that's because there are 12 members of the FOMC. That's the committee that decides on the path of interest rates. And we don't know how much pull the new chair will have with those members, certainly if they have a majority on their side. And remember, some of these people are political appointees. Some are regional Federal Reserve directors. Then they would have more sway. Now, President Trump has not been shy. He wants to see interest rates slashed. And that's the kind of thing that on its face benefits everybody who's borrowing money, whether they're individuals looking for a new car loan, people shopping for a new home mortgage, or businesses who are trying to borrow money. In a lot of ways, they use that borrowed money to expand. But there's a question here about what that would do to the wider U.S. economy and whether that would be seen as, you know, an almost artificial way of achieving growth, while the economic underliers, the real foundations, are in fact weaker. And that's why you and I pay attention to things like the unemployment rate and the strength of the labor market. Unemployment is ticking up, although it does remain quite low. And we're seeing the labor market loosen a little bit. That means we see more people out of work and we see wages not really growing at a pace we've seen before and not really keeping up with inflation. All those kinds of things could naturally bring down high prices if given time to work. But we're not sure what kind of picture we see in 2026, because certainly there are more variables at play. Given time to work, let's talk about that, because people are impatient. They don't like to give time for policies to work. What are you expecting in terms of affordability, in terms of impact of tariffs, et cetera, for this year? Right. Well, impact of tariffs is the big one because we do see that flow down through the economy and impact prices, whether they become a bit higher or certainly they could become a bit lower if more things are made in the U.S. and prices are slashed. Now, at the same time, the path of inflation in 2026 is thought to remain above 3 percent for at least the first half of the year. And then economists differ. Some expect it to be around 3 percent even toward the end of the year. Others are saying we could see the mid to two, you know, low 2 percent range. And the reason why 2 percent matters is because that's the Federal Reserve's goal. They've said for years now, ever since we were coming off of Covid and we saw prices really go wild with supply chain snarls, they've said they want to see inflation come back down to the 2 percent target. But there's a question of whether they can get there and how turbulent that path will be. That's why we're talking about a bumpy landing and not the smooth landing that Jerome Powell and others were anticipating and hoping for when we started this conversation years ago. All right, Erin Delmore. Good to see you. Thank you.

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