US President Donald Trump has backed off from his previous threat to remove Federal Reserve Chair Jerome Powell, instead focusing on pressuring Powell to cut interest rates. This shift marks a dramatic reversal from earlier statements where Trump had openly criticized Powell and suggested his firing was imminent.
Trump Shelves Dismissal Plans
In a recent speech, President Trump clarified that he had “no intention of firing” Powell, despite ongoing disagreements over interest rate policy. This marks a stark contrast to his earlier remarks, when Trump had called Powell a “loser” and expressed frustration over the Fed Chair’s refusal to lower rates.
Just days before this, Trump had suggested Powell’s removal was needed, fueling speculation about a looming dismissal. However, this abrupt change in rhetoric signals that Powell will remain in his post for the foreseeable future. This shift has led US traders to backtrack on bets regarding Powell’s potential ousting, with predictions on platforms like Polymarket showing reduced likelihood of his termination.
Trump Intensifies Push for Rate Cuts
Though Trump has abandoned plans to fire Powell, his calls for interest rate reductions have only intensified. During the swearing-in of new SEC Chair Paul Atkins, Trump urged Powell to adopt a more aggressive stance on rate cuts, describing the current moment as “a perfect time” to reduce rates.
Trump has repeatedly warned that the US economy could face a slowdown if the Fed does not act. He pointed to the European Union, which has cut rates seven times, while Powell has been hesitant to make similar moves amid global economic uncertainties, particularly in light of the ongoing trade war.
In 2024, the Fed implemented three interest rate cuts, but Powell remains cautious, citing concerns over Trump’s unpredictable trade policies and their potential impact on the global economy.
Potential Impact on Cryptocurrencies
Trump’s pressure on the Fed to lower rates is already reverberating across markets, with analysts predicting a significant boost for risk assets like cryptocurrencies. A rate cut could weaken the US dollar, making alternative investments, such as Bitcoin, more attractive. In the past, Trump’s vocal criticism of Powell has coincided with rallies in the cryptocurrency market, and there’s speculation that similar moves could drive Bitcoin and other cryptos to new heights.
Bitcoin’s price surged to $93,000 following Trump’s recent remarks, indicating that the crypto market is reacting positively to the ongoing uncertainty surrounding US monetary policy.
While Powell has remained steadfast in his approach, legal questions surrounding the president’s authority to remove a Fed Chair persist, adding another layer of complexity to this developing economic saga. For now, Trump’s focus remains on pushing for more aggressive interest rate cuts as he eyes potential economic challenges ahead.
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