[Text/Observer Network Wang Yi] On May 29th local time, Trump called Fed Chairman Powell to the White House for their first meeting since he resumed his presidency, and criticized Powell face-to-face for not cutting interest rates as a "mistake".

The New York Times reported that this meeting was organized at Trump's request and was the first meeting between the two since Trump returned to the White House. The last meeting between Powell and Trump was in November 2019. Powell also confirmed that the meeting was initiated by Trump, stating that he had never sought to meet with the current U.S. president and did not believe that the Federal Reserve chairman had the authority to seek a meeting with the president.

According to the statement released by the Federal Reserve after the meeting, Powell and Trump discussed issues such as economic growth, employment, and inflation, but did not discuss any possible future monetary policy actions by the Federal Reserve.

The statement said that Powell emphasized that the policy path would be entirely dependent on upcoming economic information and the economic outlook reflected by that information. He told Trump that the Federal Reserve would "formulate monetary policy according to legal requirements, maximize employment and price stability, and make these decisions based solely on careful, objective, and non-political analysis."

Federal Reserve statement

White House Press Secretary Caroline Leavitt responded by saying that she and Trump both saw the Federal Reserve's statement and considered it correct. She added that "the president indeed said he believed that Chairman Powell's failure to lower interest rates was a mistake, which put us at a disadvantage economically compared to China and other countries."

The Federal Reserve maintained the federal funds rate target range unchanged at 4.25% to 4.50% at its most recent monetary policy meeting on May 7, and indicated that they might keep the rate at this level for several months ahead.

The minutes of the Federal Open Market Committee (FOMC) from the May meeting released by the Federal Reserve on the 28th showed that policymakers believed that tariffs and policy instability could increase uncertainty about the U.S. economic outlook and raise risks of unemployment and inflation. They stated that if inflation persists while economic growth and employment prospects weaken, the committee may face difficult trade-offs in the future.

Since Trump's second term as president, the Federal Reserve has kept the interest rate range unchanged. Reuters reported on May 29 that the market currently expects the Federal Reserve to cut rates in September and again in December.

In 2017, Trump nominated Powell as the Federal Reserve chairman. Reuters

The Federal Reserve's观望 attitude infuriated Trump. Recently, following the announcement of a series of tariff policies that caused a plunge in U.S. stock markets, Trump repeatedly demanded that the Federal Reserve quickly cut interest rates and publicly criticized Powell as a "big loser" and "too late guy," even considering removing Powell from office.

Under Trump's appointment, Powell began leading the central bank in 2018, but they soon clashed over interest rate decisions. After Biden took office, he re-nominated Powell for another term as Federal Reserve chairman, with a term until May 2026.

The threat of Trump attempting to dismiss the Federal Reserve chairman unsettled financial markets because U.S. financial markets rely on the independence of the Federal Reserve, requiring it to fulfill its duties without political interference. Scholars consider this crucial for U.S. economic stability.

After triggering days of market turmoil, Trump compromised, saying he had "no intention" to dismiss Powell and that he "had never done so."

Trump's threats have also been questioned by the U.S. Supreme Court. In a ruling on May 22, the U.S. Supreme Court described the Federal Reserve as a "structurally unique, quasi-private entity." CNBC believes that although this ruling does not explicitly prohibit Trump or other presidents from dismissing members of the Federal Reserve Board, it indicates that any such action by the president would face strong resistance from the Supreme Court. Reuters noted that this, to some extent, calmed the markets.

The Guardian reported on the 29th that all previous presidents have respected the Federal Reserve and its independence, but Trump's attempt to pressure the Federal Reserve to cut interest rates through public pressure made the usually cautious Federal Reserve officials issue a brief statement after Trump and Powell's meeting on the 29th, firmly upholding the independence of the Federal Reserve.

CNN pointed out that although Trump recently softened his stance toward Powell and no longer demanded the resignation of the Federal Reserve chairman, his administration still might find ways to reshuffle the upper echelons of the Federal Reserve. Trump hinted in recent interviews that he would not dismiss Powell because "anyway, he can replace him soon...you know, time is short."

This article is an exclusive contribution from Observer Network and cannot be reprinted without permission.

Original source: https://www.toutiao.com/article/7510053097704538643/

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