Why Donald Trump continues to attack the boss of the Federal Reserve Jerome Powell

US President Donald Trump has well -known enemies: illegal immigrants, low -speed showers and the last, but above all, the head of the American central bank.

Streced by Trump to direct the federal reserve from 2018, Jerome Powell almost immediately found himself under fire – described on social networks as a bone and wondered about the information that the president wanted him to leave.

But also uncomfortable Powell could then have been, his position only worsened.

Not only does he supervise an economy where the risk of recession increases quickly, but Trump flirted publicly with his withdrawal, writing on social networks last week: “Powell’s termination cannot come quickly enough!”

Coming at a time when Trump pushed to extend the presidential power, while political opponents break and plowing previous judicial efforts to verify his action, he made the alarming that he is more serious and could be more able to exercise control of the Fed than during his first mandate.

Tensions have cooled this week, when Trump, one day after a market slide, some commentary analysts, denied journalists that he ever intended to dismiss Powell.

He came in the midst of other de -escalation clues in Trump’s economic rhetoric, because his policies, in particular the commercial prices, faced a growing political and commercial reaction.

But Trump did not offer a lot of assurance that he would limit his interventions to the Fed, by maintaining his right to have an opinion and noting that he could call Powell to discuss his concerns about the bank’s interest rate policy.

Donald Kohn, a principal researcher at Brookings Institution and the former vice-president of the Federal Reserve, said that the change of tone seemed intended to calm the financial markets, but he did not think that he marked the end of a fight against the Fed, an institution considered vital for the health of the greatest economy in the world.

“It is a testimony to market response,” he said. “But I think it’s too early to say that there is stability there.”

Trump’s confrontation with the FED is ostensibly rooted in the differences compared to the place where the bank should correct its key interest rate, which plays an influential role shaping loan costs for credit cards, mortgages and other loans.

The lower rates facilitate borrowing and tend to provide an economic boost. Higher interest rates are reducing activity, helping to maintain stable prices.

Trump, who cut his teeth in a professional manner by taking loans as a real estate developer, has long admitted that she had liked a low interest rate policy.

He opposed when the Fed increased rates during his first mandate and pushed Powell to reduce them now, arguing that inflation has cooled and that the maintenance of too high rates could make unnecessary economic damage.

“There may be a slowdown in the economy unless Mr. Loser, a large loser, reduces interest rates, now,” he wrote on social networks earlier this week, referring to Powell.

Trump is hardly the first politician to throw the bank as a scapegoat at a time of economic disorders – or to put pressure for lower interest rates.

He is also not alone in his criticism of Powell, who has sadly given up initially the inflation of post-pandemic prices as “transient” and was for lack of being too concentrated on the data of backward appearance.

Trump’s pressure on the bank, however, breaks with the tradition of Washington in recent decades in presidential deference to the Fed.

He made comparisons with former President Richard Nixon, who pushed his president of the Fed to loosen his policies before the 1972 elections, later moved to having fueled the “stagflation” dynamics with a strong growth with low growth of this decade.

The idea that Trump could exercise his control over the Fed arouses horror among many economists, who say that history is strewn with examples of countries where political interference in central banks has led to a prices spiral and economic ruin.

Sarah Binder, professor at George Washington University and scholar in the Federal Reserve, said that Fed’s independence is essential to maintain the market’s faith that inflation will be controlled.

If it is shaken, this could result in higher borrowing costs for everyone, because investors demand higher interest rates to have debts, she warned, noting that if the Fed finished rates, it is likely to arouse speculation about Trump’s influence-no matter how, if necessary, he played in the decision.

“This is ultimately the problem. These are perceptions of independence that really matter and that is what the pernicious effects of attacks are that they raise doubts about whether the Fed can be as faithful as central bankers want to be,” she said.

Joe Lavorgna, chief economist of the SMBC Nikko Securities, who sat on the National Economic Council during Trump’s first term, said that he did not need Trump to become his attacks again, noting that he was making a “very classic macro argument” on the defects of the bank.

“I am completely on board with sympathies or comments from the president that the Fed was historically late,” he said, adding that he thought that the stock market falls had been mainly motivated by questions about commercial policy.

He said he thought that Fed officials would remain more sensitive to the financial conditions than the president, noting that, if anything, Trump pressure could make more hesitant, lest she be perceived as being intimidated.

“In the end, the Fed will do what is cautious,” he said. “The question is just timing.”

Powell, a longtime lawyer from Washington, whose mandate as president should end next year, argued that he was not mistreated – and not influenced – by criticism and said that Trump did not have the legal power to withdraw it.

But the strength of his position is a question of legal debate.

According to the law, the governors of the Fed can only be deleted for good reason, but it is not clear if this protection extends to the role which leads the board of directors.

The administration has already taken measures to reduce the regulatory role of the Fed and is engaged in a legal battle concerning the expansion of the presidential authority on other government agencies set up with characteristics, as for the protections of cause, intended to isolate them from the partisan pressure.

Mark Spindel, founder and investment director of the investment consulting company based in Washington, Potomac River Capital, who worked with Professor Binder on Fed studies, noted that the tradition of the “independence” of the Fed had evolved over time, often after a political or economic crisis.

“The things that are given can be removed,” he said, a few hours before Trump seems to go back.

Asked his thoughts again a few days later, Mr. Spindel only wrote two words in response: “Damage caused”.