In an economically weakened America, Donald Trump aspires to radical changes. For this, he meticulously chooses his allies for the years to come. But certain institutions, such as the Federal Reserve (Fed), are reluctant to bend in the face of its ambitions. Between monetary independence and presidential pressure, the relationship between Trump and Jerome Powell, current head of the Fed, promises to be turbulent.
Donald Trump facing the Fed: standoff and ambitions
Donald Trump, the man who wants to save America with Bitcoin, has always had an obsession: keep tight control over the levers of the American economy. And for him, the Fed is a key player that he cannot ignore. Since his first mandate, he openly criticizes the monetary policy led by Jerome Powellwhom he had appointed to head the institution in 2018.
The ex-president accuses the central bank of not following directionsparticularly in terms of lowering interest rates, a tool that he considers essential to support growth and financial markets. In response, Powell defended theindependence of the Fedrecalling that its decisions are based on economic analyzes and not on political priorities.
This tension came to a head when Trump brought up the possibility of sacking Powell, a legally questionable initiative. However, the former president persists: “ The president should have his say. »
For Powell, the response is clear : “ Our decisions are independent and will not be dictated by anyone. »
The American economy under the microscope of the Fed
Despite Trump's criticism, Jerome Powell wanted to welcome the resilience of the American economy. With a historically low unemployment rate at 4.1% and robust growth, the United States continues to stand out among major economic powers. However, challenges remain numerous.
Economic assessment under Powell:
- GDP growth: twice as fast as that of the euro zone;
- Inflation: falling, but still above the 2% target;
- Labor market: inflationary pressure falling thanks to slight stabilization;
- Prime rates: adjusted cautiously, currently between 4.50% and 4.75%.
For Powell, maintaining balance is crucial: stimulate growth without fanning the flames of inflation. However, Trump sees these choices as unnecessary obstacles to his economic ambitions. The Fed, for its part, remains adamant on its mission to ensure financial stability, regardless of political injunctions.
Inflation and political tensions: an explosive cocktail
Inflation is one of the sinews of economic war. Under Powell, the Fed committed to gradually reducing this phenomenon, but the results are slow to convince everyonestarting with Trump. In October, inflation rebounded to 2.6%provoking new criticism from the ex-president and concerns.
Trump believes that more aggressive rate cuts could avoid unnecessary stress on the markets. However, Powell remains cautious: “ A bumpy ride is expected. »
Political pressures don't help. Trump wants rapid action to seduce Wall Street and support his presidential ambitions.
But beyond the figures, it is the very philosophy of economic management that opposes the two men. For Powell, stability takes precedence over flashes of brilliance. For Trump, the short term wins, even if it means ignoring the warning signals sent by economists.
If he returns to the White House, Donald Trump does not hide his intention to fire Gary Gensler, head of the SEC, and continue his standoff with Powell. The latter, although solid on his support, could consider leaving his post to avoid a new open war. What happens next promises to be as unpredictable as Trump's policies.
Maximize your Tremplin.io experience with our 'Read to Earn' program! For every article you read, earn points and access exclusive rewards. Sign up now and start earning benefits.
