Details of the secret meeting between President Trump and Treasury Secretary Bescent, will they fire Powell?

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3 Min Read

US Treasury Secretary Scott Bescent reportedly gave President Donald Trump a detailed and detailed conversation.

According to sources familiar with the issue, Bescent clearly explained to Trump the risks that such steps pose to the economy, markets and politics as Powell enters the final ten months of his term.

Bescent’s key points to Trump’s warnings included a signal that the Fed was preparing to cut interest rates by the end of the year, a potential negative market response, and the political and legal challenges of each. Sources said Bescent noted that such a move is unnecessary, the economy is already in good condition and the market is actively responding to Trump’s policies.

Powell’s potential layoff has been debated for several months, but the issue resurfaced last week. Trump frequently complained that the Fed should cut interest rates, and White House officials reported that in a meeting with Republican lawmakers the president said he was considering firing Powell. But Trump told reporters the same day he had no such plans.

The debate temporarily rattles financial markets, with investors concerned that the removal of central bank governors’ political motivation could undermine the Fed’s ability to control independence and inflation.

In April, The Wall Street Journal reported that Bescent, along with Commerce’s Secretary Howard Rutnick, had advised Trump to fire Powell. In recent developments, Bescent reminded Trump that if Powell is removed, he could file a lawsuit and delay the lawsuit until May, when Powell’s term ends.

Also, some advisers have shown that if Powell is ruled out, Vice-Chairman Phillip Jefferson will serve as acting chairman, but he is also Biden’s appointee, indicating he is close to Powell. They also point out the difficulty of quickly checking out new presidential candidates for the Senate summer break.

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This was Bescent’s other message to Trump. The President has the option of making two important appointments at the beginning of 2025 to determine the direction of the Fed. Fed board member Adriana Kugler’s term ends in January and Powell will end in May. This gives Trump the opportunity now to establish his long-term influence on the Fed.

*This is not investment advice.

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