President-elect Donald Trump has indicated in a weekend interview that he does not intend to replace Federal Reserve Chair Jerome Powell.
Powell, for his part, has stated that he would not resign if pressured by the incoming president.
The financial community is closely monitoring the dynamics between Trump and Powell, as well as potential future appointments and policy shifts.
Despite Trump’s announcement, the relationship between the two appears to be on a potential collision course.
In an interview on NBC’s ‘Meet the Press,’ Trump confirmed that he would not replace Powell, the individual he appointed in 2017.
Trump has previously threatened to dismiss the central banker and even suggested during his campaign that the president should have a direct say in the Fed’s interest rate decisions, which could lead to conflicts.
Powell has maintained that he would not step down if requested by Trump and has emphasized the importance of the Fed’s independence.
Following the Fed’s policy meeting on December 18th, Powell is expected to address the central bank’s outlook under the Trump administration.
The future remains uncertain for Trump and Powell.
During the campaign, Trump’s team drafted a plan to involve the president in monetary policy decisions, a notion Trump has not publicly discussed since his election.
Economists warn that political interference in monetary policy often leads to higher inflation globally.
Powell has noted that Congress has consistently backed the Fed’s autonomy.
Some Trump supporters have proposed the idea of a ‘shadow chair’ by announcing Powell’s successor before his term ends in 2026, a concept Powell has rejected.
Trump could influence Federal Reserve policy through other appointments. His first opportunity to appoint a governor will be in 2026 when Adriana Kugler’s term concludes.
That same year, Michael Barr’s term as vice chair for supervision and Powell’s chairmanship will end. While their terms on the board of governors extend beyond these roles, Trump could potentially appoint new leadership.
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