Powell brushes off Trump, flags US fiscal risks

Federal Reserve Chair Jerome Powell brushed off repeated attacks and dismissal threats from President Donald Trump, while cautioning that the US fiscal trajectory is unsustainable and needs urgent correction.

Speaking at the European Central Bank’s (ECB) annual forum on July 1, Powell was questioned about Trump’s pressure campaign.

He emphasized his focus on fulfilling the responsibilities of his role, receiving applause from both the audience and central banking peers.

Although he avoided direct commentary on fiscal matters, Powell addressed the implications of a proposed congressional spending plan that could increase the deficit by $3.3 trillion. He noted that the fiscal path is unsustainable and must be addressed promptly.

Trump has persistently criticized Powell and the Fed, repeatedly urging aggressive interest rate cuts and using derogatory language to describe the Fed chair.

While Trump has softened earlier threats to dismiss Powell, Treasury Secretary Scott Bessent indicated the administration may announce a replacement candidate as early as January, potentially establishing a de facto successor before Powell’s term ends in May.

Asked whether he intends to stay on the Fed’s Board of Governors after stepping down as chair, Powell declined to confirm any plans.

His current term as governor extends through 2028, which gives him the option to remain on the board, similar to Michael Barr, who stepped down as Vice Chair for Supervision earlier this year but retained his board seat.

With 10 months remaining in his term as chair, Powell is maintaining focus on achieving price stability, maximum employment, and overall monetary resilience, objectives he considers central to the Fed’s mission.

Powell has often referred to former Fed Chair Paul Volcker as a role model, describing him as one of the greatest public servants of his era.

Many analysts believe Powell seeks to be remembered in a similar light, as a central banker who resisted political pressure to uphold price stability, potentially signaling that interest rates could remain elevated for an extended period.