Trump Steps Back From Powell Criticism In Relief To Shaken Markets: 'No Intention To Fire Him'

The market downturn before Tuesday's recovery appears to have made President Donald Trump rethink his approach toward Federal Reserve Chair Jerome Powell. In a turn of events, the president notably softened his stance toward the central bank chief.

Speaking to reporters at the Oval Office, Trump said, "I would like to see him be a little more active in terms of his idea to lower interest rates…but, no, I have no intention of firing him."

"This is a perfect time to lower interest rates. If he doesn't, is it the end? No. It's not."

The about-turn comes after his recent string of sharp criticisms about Powell and his handling of monetary policy. 

Last Thursday, in a social media post, the president said Powell is "always TOO LATE AND WRONG," as he highlighted the different approach the Fed chief's European counterpart was taking.

Trump had said, "Powell's termination cannot come fast enough."

In a Q&A session with reporters last week, the president also said that Powell should lower the Fed fund rates shortly after the latter suggested in a public speech that he was willing to wait before moving interest rates, given the risk of rising inflation and weakening labor market conditions.

"If I want him [Powell] out, he'll be out of there real fast, believe me," Trump had said last week.

A Wall Street Journal report said Trump's softened stance came after officials from his administration and his advisers, including Treasury Secretary Scott Bessent, pressed the president on the potential market fallout of taking the heat to the Fed's camp.

The report also said that if Trump were to fire Powell, he would have had to face a legal battle over it — an unwanted distraction when U.S. tariffs on its trading partners threaten a global trade war.

Trump also commented on China's tariffs, admitting that the 145% tariffs on the Asian nation were "very high" and hinting that the levy would come down, although he ruled out a "zero" tariff regime.

The Journal also offered a legal take on Trump's ability to fire Powell. The founding laws of the central bank dictate that the Fed chief or Governors can be dismissed only for cause, interpreted mainly as malfeasance or dereliction of duty.

Following Trump's recent comments, the major U.S. index futures climbed sharply, suggesting back-to-back gains for the market. Gold futures pulled back from a record high and traded down over 1% in the Asian session.

The SPDR S&P 500 ETF (SPY) exchange-traded fund (ETF) ended Tuesday's session up 2.60% at $527.25, while the Invesco QQQ Trust (QQQ) ETF jumped 2.63% at $444.48.

The SPDR Dow Jones Industrial Average ETF Trust (DIA) rallied 2.69% to $391.87.

Notwithstanding the bounce back, the SPY, QQQ and DIA are now down over 9.8%, 13%, and 7.5%, respectively, for the year-to-date period.

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