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Donald Trump has said he has “no intention” of firing US Federal Reserve chair Jay Powell, sending global stocks and the dollar higher.
The president has repeatedly hit out against the Fed chair’s refusal to chop rates of interest and last week signalled he believed he could dismiss Powell before his term as central bank head involves an end in May 2026.
Trump reiterated his complaints that the Fed needed to chop borrowing costs in comments within the Oval Office on Tuesday afternoon, but he added: “I don’t need to discuss that because I even have no intention of firing him.”
Futures for the S&P 500 and Nasdaq rose during Asian trading on Wednesday. The dollar index is up 0.4 per cent, extending its recovery.
US bonds rallied, with yields on 10-year Treasuries falling 0.06 percentage points to 4.34 per cent while those on 30-year Treasuries dropped 0.08 percentage points to 4.80 per cent. Bond yields move inversely to prices.
Japan’s broad Topix rose 2 per cent, Hong Kong’s Hang Seng 2.3 per cent and Taiwan’s benchmark 3.6 per cent.
Investors said the president’s apparent U-turn on Powell proved there have been not less than some members of his inner circle who recognised that markets value the independence of America’s major institutions.
“This shows there are some guardrails around this president,” said Dec Mullarkey, managing director at fund manager SLC Management. “This looks like [Treasury secretary Scott] Bessent’s touch,” he added.
“Clearly people have talked to [Trump] and explained that [firing Powell] would have caused huge volatility. Bessent recognises that the integrity of markets needs to be maintained.”
Powell has repeatedly said that he would serve his full term as Fed chair and believed that his early dismissal wouldn’t be allowed under US law.
Investors’ concerns over his tenure rose after Kevin Hassett, director of the National Economic Council, said on Friday that Trump would “proceed to check” the matter of dismissing Powell.
Hassett, then chair of the Council of Economic Advisers, backed Powell after the Fed chair and Trump fell out during his first term as president.
Financial markets sold off on Monday after Trump attacked Powell as “Mr Too Late” in a post on his Truth Social platform, with the dollar falling to a three-year low against a basket of currencies and the S&P 500 index dropping 2.4 per cent.
US stocks and the dollar largely recouped their losses during regular trading on Tuesday after Bessent said the trade war with China was “unsustainable”. Trump also said he would strike a cope with China — something he has said repeatedly — and that tariffs would “come down substantially”.
The Fed has been on a collision course with Trump since shortly after he took office, however the attacks from the White House have intensified ever for the reason that president launched his “reciprocal tariffs” on April 2.
Rate-setters, including Powell, have made clear that they are going to postpone any rate of interest cuts until they’re confident that Trump’s trade policies is not going to result in a persistent rise in inflation.
The Fed chair and his colleagues have also made clear their concerns that Trump’s tariffs raise the prospect of lower growth and better prices, weakening an economy that officials previously said was in fine condition.
Trump took to Truth Social last Thursday saying Powell’s termination “couldn’t come fast enough” after the Fed chair confirmed the day gone by that the central bank wouldn’t come to the stock markets’ rescue and cut rates to counter fears that the tariffs would drive the US economy into recession.
Additional reporting by George Steer and Peter Wells in Recent York and Arjun Neil Alim and William Sandlund in Hong Kong
