President Donald Trump isn’t letting up on his criticism of the Federal Reserve but he seems to be cooling on the idea of actually firing Chair Jerome Powell.

Speaking to reporters at the White House, Trump fired another verbal broadside at the Fed chief:

“I think he’s done a bad job, but he’s going to be out pretty soon anyway. Eight months, he’ll be out.”

Trump thinks Powell’s days are numbered, but not by executive action. Powell’s current term ends in May 2026, leaving plenty of room for political theater in the meantime.

Here’s what you need to know and why it matters.

1. Trump Still Thinks Powell Is “Too Late”

This isn’t new. Trump’s been hammering Powell for years, calling him slow on the rate-cut trigger. Even after the Fed slashed its benchmark by a full point in late 2024, Trump says Powell “should have lowered rates many times” earlier.

His main gripe? High borrowing costs are choking housing affordability. In classic Trump style:

“People aren’t able to buy a house because this guy is a numbskull.”

Trump’s floated firing Powell before, even asking GOP lawmakers last week if he could pull it off. But the president admitted it’s “highly unlikely” he’ll try. Why? Legal gray zones. The Federal Reserve Act makes it tricky to can a chair mid-term without cause. Traders can breathe, for now, knowing Powell isn’t getting the boot overnight.

3. Renovation Drama Adds Fuel

The Fed isn’t just battling Trump on policy, it’s catching heat for spending. The White House is questioning a $2.5 billion renovation of two Washington buildings. Treasury Secretary Scott Bessent hinted at “mission creep” inside the Fed and promised a deeper probe:

“Not their monetary policy, but everything else.”

This just shows will expect more noise about Fed accountability, even if rates stay center stage.

4. Rate Cuts Still the Real Story

For us traders, this isn’t about Powell’s office furniture, it’s about policy tone. Trump wants faster, deeper cuts to juice growth ahead of the election. The Fed? Still cautious, eyeing inflation data before moving. Futures now price in a 74% chance of a cut by September, but that path is far from guaranteed if Powell holds his line.

5. FX Watch: USD Volatility in Play

Political jabs at the Fed usually don’t move markets much, until they do. If this rhetoric starts pressuring Powell or sways Fed messaging, expect the USD to wobble, especially against safe havens like JPY and CHF. For now, the DXY is holding steady, but traders are watching the July CPI print like hawks.

Here’s the Takeaway:

Trump’s threat to fire Powell looks like more bark than bite, but the messaging war isn’t over. Every jab adds political heat to the Fed’s already high-stakes balancing act. For us traders, the Powell-Trump saga is background noise, until it isn’t. Keep your eyes on inflation data and the September Fed meeting. That’s where the real volatility lives.

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