Trump Steps Back as Market Wobbles... "No Intention to Fire Powell"

Blaming the Media While Evolving... Still Demanding Rate Cuts

Evercore ISI "If Dismissal Was Enforced, It Could Have Led to a Fiscal Crisis"

President Donald Trump, who has been strongly pressuring for a rate cut by hinting at the possibility of dismissing Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), has stepped back. As the financial market wobbled due to rumors of Powell's dismissal, he moved to contain the situation by stating, "I have no intention of firing him."

President Trump made these remarks while speaking to reporters after the swearing-in ceremony of Paul Atkins as Chairman of the Securities and Exchange Commission (SEC) at the White House on the 22nd (local time). By confirming that he would guarantee Chairman Powell's term, which lasts until May next year, he reassured the market. Instead, he blamed the media, saying they reported excessively.

This is a reversal from his claim on the 17th that "Powell's term should end quickly." President Trump also criticized Chairman Powell on social media the previous day, calling him "Mr. Too Late" and a "major loser."

The possibility of Chairman Powell's dismissal had caused significant fluctuations in the U.S. stock market. The previous day, all three major indices of the New York Stock Exchange fell by more than 2%. However, when President Trump denied the dismissal rumors, stock index futures rebounded by nearly 2% at one point.

Chris Weston, a strategist at Pepperstone Group, analyzed, "Although it's still early, the market sentiment is definitely changing," and "the strong 'Sell America' trend from the previous day is being partially reversed."

Krishna Guha, Vice Chairman of Evercore ISI, evaluated, "We already saw a 'brutal preview' of how the market would react if President Trump actually dismissed Chairman Powell," and "This statement is a positive signal that reduces the possibility of stagflation or a tariff crisis expanding into a national debt crisis."

However, President Trump's pressure on the Fed for a rate cut continued. President Trump said, "Now is the perfect time to cut rates," and "I hope Chairman Powell will take a more proactive approach." He reiterated that prices of groceries and other goods have fallen, adding, "We want the Fed to move preemptively, not react slowly."

Experts point out that the president's attempt to influence the independence of the central bank itself is problematic. Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), emphasized, "The most important value that a central bank must uphold is trust, and trust involves independence," and "This trust is something very precious that must be protected."

Reporter Da-yeon Lim allopen@hankyung.com