With this announcement, former US President Donald Trump is once again making headlines. If he should move back into the White House during this year's presidential election in November, he has already declared that he would not reinstate his former Fed Chief Jerome Powell as the head of the Federal Reserve.
In an interview with the TV show "Fox Business," which was broadcast on Friday, Trump discussed his plans for the central bank. He is currently leading significantly in the Republican primaries, giving him hope for another term as president.
However, these surveys only relate to support within one's own party and not to the actual voter turnout. Powell's current term as Fed Chairman also continues until 2026.
Powell, Whom Trump Once Appointed, Is Too Lenient in the Eyes of the Former President and Has Not Met His Expectations. In Particular, Trump Repeatedly Criticized Powell's Allegedly Restrictive Interest Rate Policy.
However, there is currently no talk of interest rate cuts, as the US labor market is very stable according to recent figures. Such economic development, however, also brings various challenges with it, according to the Federal Reserve. On one hand, wages are rising, which in turn increases the potential for additional inflation risks.
Analyst Elmar Völker from Landesbank Baden-Württemberg does not expect a prime rate turnaround at the next Fed meeting in March due to these circumstances. He justifies this by stating that the likelihood for it is almost zero.
Last Wednesday, the Fed held its key interest rates steady, as widely expected, thereby also tempering expectations for imminent rate cuts.
Federal Reserve Chair Jerome Powell expressed that there needs to be more confidence in the sustainable return of inflation. Therefore, he considers monetary easing in March to be unlikely. Rather, the Fed could "at some point" during this year initiate a turn in interest rates.
