Analysis: Trump Unlikely to Fire Powell, but May Still Influence the Fed

Jinshi reports that Francesco Bianchi, an economics professor at Johns Hopkins University, states that Trump is unlikely to follow through on his threat to dismiss Federal Reserve Chair Jerome Powell, but the public pressure from his campaign to push for interest rate cuts will still affect the Fed's decision-making. After Trump's threat last week, the Fed now knows it will be publicly blamed if a recession occurs. The stock market dropped sharply after Powell made it clear he is not in a hurry to cut rates, and Trump responded by indicating he might fire Powell, raising concerns about the Fed's independence being compromised. Francesco Bianchi believes Trump will not act on his threat mainly because Powell's term will end in about a year, and the chaos caused would outweigh the benefits. Replacing Powell would lead financial markets to expect further interest rate hikes. (Jinshi)