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Markets breathed a sigh of relief after President Donald Trump stated he has “no intention” of firing Federal Reserve chairman Jerome Powell. U.S. stock futures surged following the announcement, with the Dow jumping over 400 points, signaling renewed investor optimism after weeks of volatility. Trump’s surprising turnaround comes after a series of public attacks aimed at the Fed chairman. The president recently called him a “major loser” and pushed the central bank to slash interest rates. As recently as last week, Trump left the door open to removing Powell altogether, sparking concerns of executive overreach and a potential crisis of confidence in central bank independence.

Investors React to Trump’s Turnaround

The markets had been on edge as Powell’s job security appeared increasingly uncertain. Unsure of the outcome, investors began shifting capital to gold and other safe-haven assets. The possibility that a sitting president might try to fire the head of the Federal Reserve shook belief in the system’s stability.

On Tuesday, however, Trump walked back his earlier comments. Speaking to reporters, he clarified, “No, I have no intention of firing him.” The resulting market reaction was immediate relief. Stock indexes soared, volatility eased, and investor sentiment rebounded. For the moment, Wall Street wants to believe that Powell will finish his term as Fed Chairman, which ends in May 2026.

Despite Trump’s earlier opposition, Jerome Powell plays a central role in shaping monetary policy. His leadership determines the pace of interest rate changes, inflation management, and liquidity control. For investors, the Federal Reserve’s independence signals long-term stability and credibility.

However, President Trump has been vocal about his desire for lower rates, arguing that they are necessary to fuel growth and keep up with global competitors. On the other hand, Powell has taken a more cautious stance, signaling that rate cuts should be based on economic data, not political timing. Investors value Powell’s consistency, even if they don’t always agree with his pace. His removal would likely have triggered major outflows from equities into bonds or foreign assets. Trump’s new position helps preserve market structure, but only for now.

The Legal Wall Trump Can’t Cross

Despite Trump’s earlier threats, removing the Fed chairman is not something the president can do easily. Under the Federal Reserve Act, the chair cannot be dismissed without cause. That standard typically refers to misconduct, not policy disagreements.

Even White House advisors reportedly cautioned Trump that firing Powell without clear legal grounds would face court challenges. More importantly, it could shatter global confidence in U.S. economic governance. The resulting sell-off would not be limited to equities. This would likely hit the dollar, Treasuries, and corporate debt as well.

Will The President Change His Mind and Attempt to Fire the Fed Chairman Again?

While markets rallied on Trump’s reassurance, the underlying issues remain. The president still wants rate cuts, and Powell has yet to signal that they are coming. If inflation remains elevated or growth softens, the pressure will return.

Investors are watching more than just Powell’s fate. Hopes are building for a resolution to the U.S.-China tariff standoff. Treasury Secretary Scott Bessent has hinted at a de-escalation, though no formal negotiations have been announced. If tariffs come down, and Powell holds firm, markets may enter a more stable period.

Still, recent events have reminded investors just how closely tied politics and monetary policy have become. While Powell’s job is safe for now, the balance of power between the White House and the Federal Reserve remains delicate.

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