But after months of announcing his intention to raise interest rates and calm the US economy, he has demonstrated his power to sharpen the markets with a few words suggesting a willingness to pause the hikes. next year.
In his speech, Powell said the rates are "just below" the so-called neutral range, which central bankers say will neither accelerate nor slow down economic growth – an evolution by report to comments that he had held in October suggesting that rates "a long way" from the neutral.
The change, albeit minor but significant, occurred at Powell has raised the markets by more than 600 points Wednesday afternoon, investors are looking forward to a possible slowdown in rising rates.
Powell attempted on Wednesday to delicately explain how the Fed was planning to evolve its policy using the analogy with entering a completely black room filled with furniture.
"What to do?" said Powell. "You're slowing down, maybe you're going a little slower, you're feeling your way, and under such uncertainty, be careful, I think that's what we did."
It was a distinct change of tone compared to early October, when the Fed chairman suggested to the central bank to go beyond neutrality, but we are probably far from neutral for the moment.
The Fed has been trying to find a balance between not going too fast and risking to shorten the economy's longest expansion compared to not moving too slowly and risking an overheating of the economy.
After the outbreak of the financial crisis in 2008, the Fed kept its rates at historically low levels to revive the struggling economy. He slowly began to increase them again in 2015, when the economy picked up steam under Obama, and he has raised rates six times since Trump took office. Three of these increases were under Powell.
Any Fed president, including Janet Yellen, Powell's predecessor – nominated by President Barack Obama and whom Trump was considering appointing for a second term – and other candidates like Kevin Warsh would likely now apply a slow stimulus but regular to keep the economy even keel.
With the Fed's rate hike, Trump called Powell "crazy" and "loco", which put him in a position to assume blame in the event of an economic slowdown or recession.
The latest issue was released Tuesday in a Washington Post interview, when Trump again attacked Powell, nicknamed Jay, for raising rates, which goes against the expansionary tax cuts. Trump and other initiatives.
"Until now, I'm not even happy with my selection of Jay," Trump told the Post. "Not even a little bit, and I do not blame anyone, but I'm just saying that I think the Fed is very disappointed by what it's doing."
"I'm doing business and I'm not accommodated by the Fed," Trump said in the interview. "They make a mistake because I have an instinct, and my intestine tells me more sometimes than someone else 's brain can ever say to me. "
While Trump remains determined in the strength of the US economy, he has been shaken by the recent instability in the markets and the announcement made this week by General Motors to close five factories and remove thousands of dollars. jobs, according to two people who spoke to the president.
In private, they said, the president seemed bewildered by the signs indicating that the economy is more fragile than what he likes to suggest in public, and thinks that he will be blamed if the situation Empire clearly. These private fears went hand in hand with Powell's fury, which Trump attributes to the situation.
Trump's new criticisms against his Fed chief also come amid reports that the president complained to Treasury Secretary Steven Mnuchin for recommending Powell to the post. The secretary pushed Trump to choose Powell, who had previously served in a Republican White House and has a long Wall Street experience.
Over the weekend, Trump came to the defense of his chief financial officer, saying that he was "extremely happy and proud of the work done" by Mnuchin.
Sending to the post, Trump again sent a reassuring message: he does not blame anyone for making the decision to appoint Powell to the position. "Listen, I took recommendations, I do not blame anyone."
Some of the president's top advisers – including Mnuchin and Larry Kudlow, director of the National Economic Council – have issued temperate warnings that a growing trade war with China would only make matters worse and allow Trump's detractors to say nothing. Allocate even more responsibility a fragile economy on him. This has led councilors to further believe that Saturday's dinner with Chinese leader Xi Jinping could create a breakthrough in the commercial stalemate, although no officials are willing to explicitly say that Expect the two men to reach an agreement, according to the two people.
The meeting of the weekend between the two leaders comes as the Fed warned that a long trade dispute with China was part of the external shocks likely to derail the US economy and cause a "fall" substantial "stock market.
Trump did not hesitate to unleash the wrath of his Fed chairman, whom the president described as a "threat" in a Wall Street Journal interview last month – a very unusual political attack on an independent policymaker. He also went so far as to consider the possibility of dismissing Powell – an authority he did not have on the Fed chairman.
Although a US president may dismiss a Fed governor under the Federal Reserve Act, which was revised in 1935, the law does not clearly define the case. President Lyndon B. Johnson discovered that the Fed's policy disagreements were not a valid "cause" when he asked his Department of Justice in 1965 when he could dismiss a Fed governor after He should be disputed with him for raising the discount rate amid signs. the economy was starting to overheat.
Protecting the central bank from political influence is a relatively recent phenomenon designed to reassure investors and keep the markets calm. But presidents returning to Andrew Jackson lobbied their central bankers to keep interest rates low. Johnson and his successor, Richard Nixon, fought with their Fed president. The former Fed Chairman, Paul Volcker, has opposed the Reagan White House about suggestions that he should lower rates to allow them to raise taxes and fill the gaps. gaping deficits.
Most White House officials believe that Trump will not reject – and most likely not – Powell.
Until now, Fed officials seemed to ignore the president's comments, repeatedly pointing out that they were continuing their activities as if nothing had happened.
"My goal is to control the controllable," Powell said at the Atlantic Festival in Washington in October. "We control what we do at the Fed, we do not let other things distract us."