Trump Reverses Course on Powell Firing amid Market Jitters, Stocks Soar

By Evans Momodu, updated 14:02

President Trump steps back from removing Fed Chair Jerome Powell after warnings of economic fallout. Markets rally as Wall Street breathes a sigh of relief.

President Donald Trump has stepped back from threats to fire Federal Reserve Chair Jerome Powell, following intense warnings from economic advisers that such a move could destabilise global markets.

His reversal sparked a strong rally on Wall Street, as investors reacted positively to signs of de-escalation in both monetary and trade policy tensions.

Amid growing fears of financial chaos, Trump told reporters Tuesday from the Oval Office, “I have no intention of firing him,” easing anxiety that had gripped the markets following a week of aggressive rhetoric.

Stock futures surged early Wednesday. Dow Jones futures jumped 750 points (1.9%), while S&P 500 futures rose 2.6% and Nasdaq futures climbed 3%. The 10-year Treasury yield fell to 4.3% as investors flocked to bonds, signaling renewed confidence in market stability.

The shift came a day after Treasury Secretary Scott Bessent announced efforts to de-escalate the U.S.-China trade war—another factor fuelling investor optimism.

Sources close to the White House say top economic aides had been warning Trump for months against removing Powell, fearing it could trigger the kind of financial upheaval typically caused by trade shocks. The risk of a prolonged legal battle and loss of credibility for the Federal Reserve also weighed heavily on the decision.

Although many advisers doubted Trump would follow through, his recent public tirades raised alarm. Last Thursday, he posted on social media that Powell’s “termination cannot come fast enough”, followed by a Monday message calling him a “major loser.”

Trump has been pressing the Fed to lower interest rates as a way to stimulate the economy—especially amid concerns that his sweeping new tariffs, part of his “Liberation Day” economic agenda, could cause significant drag.

Powell, however, has maintained that rate decisions must be based on economic data, not political pressure. He’s insisted that any move to raise or cut interest rates will be carefully considered by the Fed’s policy-setting committee, with the next decision expected in May.

White House Press Secretary Karoline Leavitt defended Trump’s criticism of the central bank, claiming the Fed acted politically during the Biden administration by lowering rates then, but not now. No evidence supports that the Fed’s decisions were politically motivated, and Powell has repeatedly denied such claims.

Leavitt asserted, “The president believes the Fed is acting in the name of politics, not economics.”

Economic adviser Kevin Hassett added fuel to the controversy by suggesting the administration was exploring legal options to remove Powell—despite earlier backing the Fed’s independence. However, even he seemed to backtrack following Trump’s comments, noting the president’s announcement may have rendered such an analysis unnecessary.

Ultimately, the decision not to pursue Powell’s removal has calmed investor nerves. With inflation, interest rates, and trade policy already clouding economic forecasts, markets welcomed any sign of reduced political volatility.

Trump’s reversal may not signal an end to his feud with the Fed, but for now, Wall Street is breathing easier.

Source: CNN 
Image: The Economic Times