President Donald Trump’s recent attacks on Federal Reserve chairman Jerome Powell caused alarm among some of his top advisers, who warned him that any attempt to remove the head of the central bank could cause as much market turmoil as his ongoing trade war, according to people familiar with the conversations.
The warnings — and the markets’ own volatility this week – seemed to have broken through. Trump backed off his threats to try removing Powell from the job on Tuesday, telling reporters in the Oval Office: “I have no intention to fire him.”
That prompted sighs of relief — not only among investors, but also among top administration officials, who had become unnerved by the heated rhetoric and wary of a prolonged legal battle should Trump attempt to unseat Powell.
Many Trump advisers did not ultimately believe the president would attempt to fire Powell, given the warnings he’d been receiving from his economic team — including Treasury Secretary Scott Bessent – stretching back several months. Trump had seemed to absorb the notes of caution.
But his amped-up rhetoric over the past week had caused fresh uncertainty about his intentions — in particular, his message on social media that Powell’s “termination cannot come fast enough!”
Afterward, his top economic adviser Kevin Hassett told reporters the White House was studying whether Trump could fire Powell, and said a potential “new legal analysis” might ease market concerns.
In reality, White House officials had long determined that firing Powell would spark legal challenges and market tumult.
And if any study was actually underway, Trump suggested Tuesday it wasn’t necessary. He said in the Oval Office he “never did” have any intention of removing Powell from the job.