Trump Assures Financial Markets on Fed Chair’s Position
Financial markets expressed relief after President Donald Trump assured that he would not attempt to remove the head of the Federal Reserve and indicated that high tariffs on China would be significantly reduced. These comments were made during a press event, which led to a rally in major stock indexes, particularly boosting bank shares in after-hours and early morning trading.
Market Reactions to Trump’s Statements
The KBW Bank Index soared by as much as 5.6% in early trading and approximately 3% by midday Wednesday. Other market indices also experienced gains; the tech-heavy Nasdaq composite rose by nearly 3%, while the S&P 500 saw an increase of around 2%. In addition, yields on 10-year Treasury notes decreased slightly, indicating a rise in demand for U.S. debt, as bond prices and yields move inversely.
Clarification on Jerome Powell’s Position
During the press conference, Trump stated he had “no intention” of firing Fed Chair Jerome Powell, despite having previously suggested on social media that Powell’s dismissal would be welcome. This declaration came in response to questions about his earlier call for “preemptive cuts” to the federal funds rate amidst speculation that he and his economic advisors were considering Powell’s removal.
Political Commentary on Federal Reserve Independence
Trump dismissed reports regarding any discussions of imposing executive action against Powell, affirming his commitment to the Fed’s leadership. “None whatsoever. Never did,” he declared, attempting to quell concerns about the Fed’s independence, which have been heightened by his comments and the administration’s broader moves to limit agency autonomy.
Continuation of Monetary Policy Discussion
Despite pledging not to remove Powell, Trump emphasized his desire for the Fed to lower interest rates, stating, “It’s a perfect time to lower interest rates.” He expressed disappointment in delayed action, asserting that it should have occurred sooner but reaffirmed he does not plan to fire Powell.
Fed’s Stance on Political Influence
Officials from the Federal Reserve reiterated their stance on maintaining independence from political pressures. Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, emphasized that their decision-making process relies on data and rigorous analysis, independent of political commentary. Powell also affirmed that they will not be swayed by political motivations, stating, “We’re never going to be influenced by any political pressure.”
Updates on Trade Relations with China
In addition to comments regarding the Federal Reserve, Trump sought to alleviate concerns about the escalating trade conflict with China, expressing that negotiations were progressing positively and that tariff rates would decrease from the headline figure of 145%, although he noted it would not reach zero. Furthermore, special advisor Elon Musk announced he would reduce his government commitments significantly while continuing to oversee efforts to streamline government spending.
