Tensions between Trump and Powell are cooling. For now.

Published On Dec 9, 2024, 8:40 AM

Tensions between President-elect Donald Trump and Federal Reserve Chair Jerome Powell are currently lessened, with Trump indicating in a recent interview that he does not plan to remove Powell before his term ends in May 2026. This reverses earlier rhetoric from both parties, particularly Trump's past criticisms of Powell. Investors are now left to consider how this might affect the Federal Reserve's decisions on interest rates, with expectations leaning toward further rate cuts despite inflation concerns.

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The easing of tensions could indicate a more stable approach to monetary policy going forward, which might reassure investors about the trajectory of interest rates. If Powell remains in control and markets perceive his decisions as stabilizing, this could positively impact financial markets, particularly financial sector stocks which often react strongly to Fed policy.

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