The Inevitable Clash Between Donald Trump and Jerome Powell
Author: Greg Valliere
December 5, 2024
IT COULD COME in mid-December or later this winter, but a heavyweight fight is brewing between Donald Trump and Jerome Powell over the Federal Reserve’s reluctance to aggressively cut interest rates.
JUST A FEW WEEKS AGO, the financial markets were convinced that the Fed would continue cutting rates, perhaps several times by spring, in response to a softening economy and signs that inflation had been defeated.
BUT AS JEROME POWELL indicated yesterday, the Fed is in no rush. The economy is humming along, perhaps at a 3 percent pace, and wage inflation is still a concern.
WHAT IF ECONOMIC DATA between now and the Dec. 17-18 FOMC meeting show a healthy economy? What if tomorrow’s unemployment report looks strong?
THE SAFE BET is for a 25 basis point rate cut later this month, but that’s becoming a close call. If the Fed fails to move, Trump could erupt.
THE MECURIAL PRESIDENT has been blunt about Powell, telling White House advisers he would like his own choice at the Fed. Can Trump fire Powell? Unlikely. Could Trump try to fire him? That’s a real possibility if the Fed moves slowly on rate cuts.
POWELL STATED AT HIS LAST PRESS CONFERENCE that he has no intention of stepping down, but if any president ratchets up the rhetoric, calling on a top government official to resign, that official would have to consider options.
AT THE LEAST, it now looks likely that the Fed and Trump are on a collision course over the pace of rate cuts. The question is when — not whether — Trump will lash out.
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MORE PARDONS? Close aides to Joe Biden are reporting that the president is under increasing pressure to issue more pardons, according to this morning’s Politico.
AT THE TOP OF THE LIST are Liz Cheney, Anthony Fauci, and Sen. Adam Schiff. The new FBI director is likely to be Kash Patel, who reportedly is preparing to bring charges against all three, and more.
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