He President of the United States, Donald Trumpis seriously considering the possibility of dismissing the president of The Federal Reserve, Jerome Powell, As revealed White House officials. The decision was discussed during a meeting with Republican legislators of Congress last night, which resulted in the increase in concern in financial markets.
In an encounter with approximately a dozen attendees, The head of state showed them a draft of a dismissal letter directed towards Powelland consulted them if they believe it should do so, indicating that it would probably do it, according to two people informed about the meeting.
Republican legislators expressed their support, although they recognized that A decision of that magnitude could generate turbulence on Wall Street and unleashed an important legal battle, according to the US press. Anyway, Trump would not have made a final decision yet.
The name dance
Kevin Hasettthe current Director of the National Economic Council and Cermal of Trump, It is the one who fucks in Punta to replace Powellwhose mandate expires next year and has not yet confirmed whether he will seek to renew his period by the North American Central Bank.
Within the payroll of candidates, the former member of the Board of Governors of the Fed also appear, Kevin Warshand the Treasury Secretary himself, Scott Besent.
However, the World Bank consultant and chief director of Tka Analytica, Tamón Takahashihe told this media that “whoever they put in the Fed, will always arrive with the label of being the one put by Trump.”
Increased inflation
The economist raised Scope that “central banks should not address political criteria to make their decisions, but They must respond to how the economy and markets are workingand based on that to make their decisions to fulfill their mandate, which is none other than Maintain inflation as low as possible”
It is a delicate situation after having met The bad retal inflation fact that was published yesterdaythat It rose 2.7% per year, more than expected by Trump’s tariff policy.
“In this context it is much more difficult, if not impossible, for the Fed to think about reducing interest rates,” he said Takahashiwhich added that “everything that is to alter that mandate affects the population, because That implies greater inflation, higher prices and everything that comes with it. ”
Similar, the Bróker Puente Advisory team explained to this medium that “Fed is likely to maintain its caution posture in terms of monetary policydespite the demands of the Republican president on the ‘need’ to cut the high cost of financing. “For that reason, they expect the entity Leave unchanged the interest rate in the current range of 4.25%- 4.50% at your meeting of the end of the month.
Loss of credibility
For their part, from Personal Investor Portfolio (PPI) they argued that “although in the papers the Federal Reserve works as an autonomous body, the truth is that its independence operates within the political limits of the moment.”
The broker explained that “History shows that even central banks with solid legal guardians have been under pressureand that this pressure, even when it does not translate into a low rate, can erode the credibility of the institution. ”
In that sense, they added that this loss of confidence “is usually associated with an increase in inflation expectations, which ends up generating a real economic effect.” And they considered that “in that context, more than a normative change, What worries is the shift of the informal limits that historically protected the Fed from the political situation“
Source: Ambito
