Join institutional investors, analysts and strategists from the world's largest banks: Subscribe today
Already have an account? log in
Powell To Trump: I’m Not Going Anywhere
Reporters only cared about one thing Thursday while questioning Jerome Powell: Donald Trump.
The Fed delivered an as-expected 25bps rate cut following the November policy gathering, which played out in the very long shadow of a remarkable US election that found Donald Trump storming to a second term in the Oval Office.
Trump and his advisors make a point of criticizing Powell whenever possible, and some characters from the Trump orbit have all but demanded Powell's resignation upon Trump (re)t
I thought it was a good press conference for Powell, particularly given all the potential pit falls related to the election and recent bond sell off. I also respect how categorical he was in his answers about resigning or potential Trump reshuffles of the committee, he did not kiss the ring as many other public figures have in the last 48 hours. Sadly, we all know that “not permitted under the law” is not something that will stop Trump from action. Funny how Powell and his crew of technocrats might be the last line of institutional defense against the insanity of MAGA, most likely Trump will be inaugurated with control of the executive, legislature and courts, civil servants will be replaced in short order and in 2026, or once Powell is ousted, the Fed will become another policy arm for MAGA.
Trump won, but it was more a vote of no-confidence in Biden-Harris economic and immigration policies, imo, than an embrace of Trumponomics (whatever that might be). Powell is more popular than Trump, and he knows it. He’s not going anywhere.
How long until Jay Powell faces another crisis. The guy has an undesirable knack for being Fed Chair during crises: end of 2018 – early 2019 (trump tirades), summer 2019 (repo), 2020+ covid, 2022 Ukraine and inflation… What’s next? I admire the guy’s perseverance. By now he’s probably thinking, “What could I possibly face that’ll be worse than what I’ve already managed to get through?” Maybe he’s starting to have fun.
Caution: Not sure “the law” will prevent Trump for forcing out Fed officials; does “the law” even apply to DJT?
My respect for Powell grows. For now, the FOMC and Trump are directionally aligned on rates. If inflation accelerates, that may change, and then the fireworks. I suppose the Federal Reserve Act could be changed, but a serious attempt to do so would, I think, trigger severe volatility in financial markets.
It’s too bad we can’t give Powell the power to set tax rates. If we really wanted a solution to inflation, we’d start ratcheting the tax rates up and make them much more progressive. That would be an immediate and direct transmission to the economy.
Alas, we’ll just have to pay the bill via inflation, and once again, it’ll be a “Heads, I win. Tails, you lose” for all the voters who fell for Trump’s schtick. At the very least, I hope the close margin in the house forces Republicans to repeal the SALT limits so I can get an even larger slice of the tax cuts that are coming. Then again, I’m sure Trump will find a way to seek his vengeance on us Californians and find a way to raise my taxes so we can provide even more red state subsidies.