U.S. President Donald Trump has clarified that he has “no intention of firing” Federal Reserve Chair Jerome Powell, despite a series of sharp criticisms in recent weeks. Speaking from the Oval Office on Tuesday, Trump said he would prefer Powell to be “a little more active” in cutting interest rates.
The remarks come after a turbulent week in which Trump labeled Powell “a major loser,” triggering a selloff in stocks, bonds, and the U.S. dollar. However, financial markets have since shown signs of recovery.
Trump’s latest comments follow speculation sparked by National Economic Council Director Kevin Hassett, who said on Friday that the president was exploring whether he could legally remove Powell. Notably, Trump nominated Powell as Fed chair in 2017, while President Joe Biden reappointed him in 2021 for a second four-year term.
So far this year, the Fed has held interest rates steady after a rate cut late last year—a position that Trump has openly criticized.
Legal experts remain uncertain about whether a U.S. president has the authority to dismiss the head of the central bank. No previous president has attempted it.
Trump also signaled a softer tone toward China, expressing optimism about trade negotiations. He said tariffs would be reduced if a deal is reached, though not entirely eliminated.
Treasury Secretary Scott Bessent echoed this outlook, calling the ongoing trade tensions with China “unsustainable” and predicting a de-escalation.
Following these remarks, major Asian markets responded positively. Japan’s Nikkei 225 climbed 1.9%, Hong Kong’s Hang Seng rose 2.2%, while China’s Shanghai Composite edged down slightly by 0.1%.
The U.S. markets also rallied on Tuesday, with the S&P 500 gaining 2.5% and the Nasdaq rising 2.7%. Futures markets pointed to continued gains overnight, as investor sentiment rebounded.
Still, concerns linger that Trump’s pressure on Powell to cut rates—combined with existing tariffs—could fuel inflation, adding to global economic uncertainty already rattling financial markets.
On Tuesday, the forecast for US economic growth for this year was given the biggest downgrade among advanced economies by the International Monetary Fund (IMF) due to uncertainty caused by tariffs.
The sharp increase in tariffs and uncertainty will lead to a “significant slowdown” in global growth, the Fund predicted.
Trump has imposed taxes of up to 145% on imports from China. Other countries are now facing a blanket US tariff of 10% until July.
His administration said last week that when the new tariffs are added on to existing ones, the levies on some Chinese goods could reach 245%.
China has hit back with a 125% tax on products from the US and vowed to “fight to the end”.
The Chinese government has not yet officially responded to the latest statements from the Trump administration.
However, an article in the state-controlled Global Times on Wednesday quoted commentators who said the remarks showed that the US is beginning to realise the tariffs do more harm than good to America’s economy.
