Treasury Secretary Backs Fed Chair Amid Tariff Deadline Tensions

Treasury Secretary Supports Fed Chair Amidst Political Pressure

Amidst the ongoing attacks on Federal Reserve Chair Jerome Powell by officials within the Trump administration, the Treasury Secretary has voiced his support, stating he sees no reason for Powell to resign. This backing comes at a time of heightened tensions surrounding monetary policy and trade tariffs. "There's nothing that suggests to me that he should be stepping down now," the Treasury Secretary told Fox Business Channel. "His term is up next May. If he wants to stay until the end, I think he should, and if he wants to leave early, I think that's an option too."

Trump's Criticism and Fed Policies

Powell has been under fire from President Trump for months due to the Fed's decision to hold interest rates steady, fearing the inflationary impact of government tariffs. Earlier this month, some Republicans also criticized Powell over the substantial costs of renovating the Fed's building. The Treasury Secretary has called for an internal review of the Fed's non-monetary activities, including the renovation projects.

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Focusing on Operational Efficiency and Transparency

The Treasury Secretary suggested that Powell focus on streamlining non-monetary policy operations within the Federal Reserve, potentially leading to improved efficiency and reduced expenses. "There's a real opportunity here for him to improve his political legacy, and that's to right-size the non-monetary policy functions that the Fed carries out," he stated. Some interpret this call as a signal to re-evaluate the Fed's role in resource management and allocation.

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Powell Focuses on Banking Regulation

Meanwhile, Powell delivered a welcome address at a regulatory conference but refrained from commenting on the economy or monetary policy outlook. He only noted that the Fed is a dynamic institution willing to listen to new ideas and feedback on how to improve the capital framework for large banks. This focus on banking regulation reflects the Fed's commitment to maintaining financial stability.

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Trade Deal Expectations Before Tariff Deadline

Regarding Trump's tariffs, the Treasury Secretary predicted a "significant amount" of trade agreements would be reached before the August 1st deadline set by the Trump administration. "I think August 1st is a very strict deadline," he said. "What I think will happen is that tariff levels will bounce back to equal levels on April 2nd, but that doesn't mean we only negotiate when countries are at higher levels."

The Impact of Trade Tensions on the Global Economy

It's worth noting that ongoing trade tensions between the US and China, among other nations, have raised concerns about slowing global economic growth. Many analysts believe that reaching trade agreements could help alleviate these concerns and boost confidence in the global economy. However, it remains uncertain whether such agreements will materialize before the stated deadline.