The American president cannot tell the Federal Reserve chair what to do – and that is by design.
But Trump could fire Powell if he chose to – unprecedented as that would be.
You only need to look at the market reaction to Trump’s language about Powell for a hint at how his firing would impact the global economy.
“Powell’s termination can’t come fast enough,” Trump said last week.
On Monday, he called Powell a “major loser”. This schoolyard language has global economic implications.
The markets – including the all-important bond markets – reacted with sell-offs at the end of the day.
Image: Donald Trump leaves the Rose Garden after announcing Jay Powell as his nominee to become chairman of the US Federal Reserve in 2017. File pic: Reuters
Powell is a registered Republican. Trump hired him as Fed Reserve Chair during his first term but the relationship became fractious, fast.
Yet Trump did not remove him back then.
The position has a four-year term and President Joe Biden nominated him to a second term in 2022. That gives him until 2026.
Trump sees Powell increasingly as a barrier to his agenda. Trump’s ‘burn hot’ economy ideology does not align with Powell’s more pragmatic centrist ideology.
He is unable to influence and bend Powell in the way that he has done with his own cabinet and members of Congress.
In his first term, Trump was talked out of removing Powell. But we know this second term is wholly different. He was talked away from the edge on many issues during his first term. This time, in many areas, he’s jumped.
Remember, Trump forced out two FBI directors – one in each term – because neither was considered to be loyal enough. The FBI, like the Federal Reserve, is considered traditionally to be independent.
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13:27
Could Trump make a deal with the UK?
Of course, the Federal Reserve has a profound global influence in a way the FBI, as an institution, does not.
The fed chair, with his role in setting interest rates and so much more, is arguably the last powerful, independent pillar of the economic policy structure in the US.
Congress has largely devolved its role to Trump and the executive branch, as illustrated by his tariff plans (which Congress could have influenced but chose not to).
Donald Trump’s removal of Jay Powell and replacement with a compliant loyalist could fundamentally shake the global economy.
Powell is one of the few reliable actors left defending economic stability in the US
Donald Trump’sdisparagement of Jay Powell as a “major loser” is not the first time he has insulted the man he appointed as chair of the US Federal Reserve in 2018.
The president appears to have had buyer’s remorse from the moment he approved the former investment banker to fill a post that is fundamental to US economic stability.
Trump was calling for the Fed to cut rates and stimulate the economy long before he was re-elected, but online barbs have more consequence when fired from the Oval Office than the campaign trail.
Equivalent to the Governor of the Bank of England, the chair of the Federal Reserve ultimately directs US monetary policy, including the setting of short-term interest rates, with the aim of maintaining high employment and stable inflation.
That makes Powell a crucial figure amid the chaos and incoherence of Trump’s economic policy, which in less than 90 days has shattered the certainties that made America the world’s largest economy, and the dollar the global reserve currency.
Image: Jay Powell speaks to the media in March. File pic: Reuters
The market reaction to Trump’s venting against Powell, and briefing that his administration is considering ways to remove him from office, suggests investors fear it will make a bad situation worse.
As traders returned from the Easter weekend with the president’s criticism of Powell ringing in their ears, the “Trump slump” deepened.
US stocks and the dollar fell, while yields on US Treasuries – the mechanism by which the government borrows money – rose, indicative of falling bond prices as investors dumped US debt.
Gold prices, meanwhile, hit a record $3,500 an ounce as investors piled into what remains the pre-eminent “safe haven” asset in times of uncertainty.
The combination of falling equity, currency and bond prices is a toxic trifecta more usually associated with emerging economies in political crisis, not the mighty United States.
We saw something similar here in 2022, when Liz Truss and Kwasi Kwarteng’s unfunded tax cuts, presented without an independent assessment from the Office for Budget Responsibility, caused a run on the gilt market.
Then it was the Bank of England that stepped in to stabilise the bond market.
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1:03
How will tariffs impact you?
What’s happening in the US is both bigger and more consequential.
Trump’s tariff program, seemingly imposed and withdrawn by presidential whim, has already proved disastrous for market sentiment, with expectations of higher inflation and lower growth, at home and globally, set to be confirmed by the International Monetary Fund in Washington this week.
Powell and the Fed are among the few reliable actors in this drama, with markets betting their next meeting in May will see rates held, in part because of inflationary policy made in the White House.
The prospect of Powell being replaced by a more pliant figure hand-picked by Trump would pull another block from the wobbling Jenga tower of US economic credibility.
The independence of the Fed is one of the foundations of American stability, an assumption that underpins the $29 trillion Treasuries market that makes the world’s debt go round.
If investors large and small, state and private, fear that the US is not good for that debt, it could be calamitous for American pre-eminence and the global economy.
Powell’s term ends in 2026 and he believes he cannot be removed by presidential decree.
That does not mean he will not face more pressure to stand aside.
Britain’s ambassador to the United States will use a keynote speech today to underline the UK-US special relationship – while also attempting to ‘Reform-proof’ his own struggling government.
Lord Mandelson, the architect of New Labour, master of political spin and now Britain’s man in Washington, will use the 2025 annual lecture at Ditchley Park to offer a positive spin on a presidency which has proudly upended norms and frayed alliances.
In the speech, parts of which have been released in advance, Mandelson will describe President Trump as a “risk taker” with an “iron-clad stomach”.
Lord Mandelson was chosen as ambassador by Prime Minister Sir Keir Starmer late last year. He is a political appointee rather than a career diplomat.
And with intriguing language he will offer his take on the parallels between Trump and Starmer’s challenges and mandates.
He will say: “I credit President Trump’s political instincts in identifying the anxieties gripping not only millions of Americans, but also far more pervasive Western trends: economic stagnation for many, a sense of irreversible decline, the lost promise of meaningful work…
“These American concerns find their mirror image in British society, where Keir Starmer won an electoral mandate for national renewal which is similar to Donald Trump’s.”
Yet Mandelson delivers the speech at the end of a week when Nigel Farage was in town.
Screaming for his own form of Trump-like national renewal, the disruptive leader of the UK’s top-polling political party – Reform – was in Washington to hobnob in the Oval Office and to tell Congress that Keir Starmer is turning Blighty into North Korea.
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3:49
Farage likens UK to North Korea in Congress
Mr Farage enjoys lapping up the limelight in Washington, where he is an old-world conservative celebrity in the new MAGA White House.
His calculation is that the MAGA wave will reach the UK shores soon.
Reform‘s policy platform is a mirror of the Trump agenda in many respects, tweaked accordingly. The administration is happy to support him. There is a MAGA-Reform mutual respect.
And so it is politically savvy or unavoidably necessary for Lord Mandelson, New Labour‘s architect laying the foundations of the current UK government, to proclaim: ‘We respect Trump too.’
The truth is the government, like so many around the world, sees Donald Trump as an infuriating and unpredictable disrupter with the ability to upend norms at the stroke of a Sharpie. But they can’t articulate that publicly.
Instead, the ‘Prince of Darkness’ will cast Mr Trump as the consequence not the cause of the disruption to international systems, even if many argue that he can be both.
As a master of spin, strategy and ruthlessness, Mandelson clearly has an admiration for Trump’s political style and sheer chutzpah.
Image: Lord Mandelson’s speech comes a week before Mr Trump’s UK state visit. Pic: AP
He will tell the Ditchley Park lecture: “The president may not follow the traditional rulebook or conventional practice, but he is a risk taker in a world where a ‘business as usual’ approach no longer works.”
At a time when the Labour government is struggling and feeling the heat from Farage and his disrupters, are these words to be read as a not-so-subtle message to Prime Minister Starmer?
Mandelson is an old-fashioned liberal. He hasn’t the stomach for ‘wokey’ politics or own goals like the arrest of Graham Linehan. Is there a frustration that the political party he built is now messing it all up?
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“Indeed, he seems to have an iron-clad stomach for political risk…” he will say of Trump, decrying the tendency of previous presidents to descend “into an analysis paralysis and gradual incrementalism”.
Lord Mandelson may be Britain’s man in Washington now but, more than anyone else to hold the post, he is deeply integrated into the Downing Street machine.
He is tight with Number 10 chief of staff Morgan McSweeney and was inside Downing Street when Friday’s reshuffle took place. A total coincidence I am told.
A week before the president’s state visit to the UK, Lord Mandelson’s speech is designed to steady a special relationship put under pressure by the return of Trump.
“Do we always have identical views?” he will say. “Of course not, we never have. And we are not looking for special treatment. Our alliance exists because it serves both nations’ interests, because the core values of Britons and Americans remain aligned, as the world around us becomes more threatening.”
Image: Lord Mandelson will say Brexit has freed the UK to pursue closer ties with the US. Pic Reuters
And, in a shapeshifting manoeuvre that only the original spin doctor could manage, Lord Mandelson, a cheerleading remainer in the EU referendum campaign, now casts Brexit as a liberator.
“Brexit has freed us to pursue closer US ties,” he will say in his speech.
“Britain has the opportunity to use its regulatory freedom and independence from European law to deepen American investment opportunities. This is crucial as, post-Brexit, we need to leverage every advantage we can to spur UK growth and employment.”
The ambassador is expected to concede that pre-referendum warnings of the demise of Britain’s trans-Atlantic clout have not transpired, while maintaining that Brexit has hit the UK financially with a net-loss to its economy.
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They say the British ambassador is the custodian of the US-UK special relationship. This ambassador has seen what the relationship looks like under Trump.
With trademark political gymnastics, he seems now to be both admiring of the Trumpian movement but also anxious that if Britain under Labour doesn’t get its house in order, then it too will get its own Trumpian disrupter.
Former US president Joe Biden has had surgery for skin cancer, his spokesperson has said.
It’s unclear when he had the procedure, but video from late August showed him leaving church in Delaware with a large, fresh scar on his head.
The spokesperson told Sky’s US partner, NBC News, that he was recovering well.
Mr Biden had Mohs surgery, which involves removing a layer of tissue, examining it under a microscope to see if any cancer cells remain, and repeating if necessary.
The 82-year had a basal cell carcinoma, one of the two most common skin cancer types, removed from his chest in 2023.
His doctor said at the time that all the cancerous cells had been removed.
The same year, Mr Biden’s wife, Jill, had two basal cell carcinomas removed from near her eye and on her chest.
His office said the prostate cancer was discovered when Mr Biden visited a doctor for urinary symptoms and that he was considering “multiple treatment options”.
“While this represents a more aggressive form of the disease, the cancer appears to be hormone-sensitive which allows for effective management,” said a statement.
Officers detained 475 people during an immigration raid on a Hyundai factory for electric vehicles in Georgia.
The majority of those detained at the 3,000-acre site west of Savannah are from South Korea, according to Steven Schrank, special agent in charge at Homeland Security Investigations.
Mr Schrank said the raid was the “largest single-site enforcement operation” in the history of the agency and followed an investigation of several months, which involved leads from community members and former workers.
The spokesman for the South Korean foreign ministry, Lee Jaewoong, said there was a “large” number of South Koreans among those detained in the raid, but did not provide an exact number.
Image: A ‘large’ number of those detained were from South Korea
He said the detained workers were part of a “network of subcontractors” and that the employees worked for several different companies on the Georgia site.
Mr Lee said South Korea’s foreign ministry is dispatching diplomats from its embassy in Washington and consulate in Atlanta to the site, and plans to form an on-site response team centred on the local mission.
“The business activities of our investors and the rights of our nationals must not be unjustly infringed in the process of US law enforcement,” Mr Lee added.
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The Department of Homeland Security said in a statement that agents executed a search warrant “as part of an ongoing criminal investigation into allegations of unlawful employment practices and other serious federal crimes”.
The manufacturing site, which employs about 1,200 people, has been hailed as the largest economic development project in the state’s history by Governor Brian Kemp and other officials.
Image: The Hyundai Motor Group plant in Georgia. File pic: AP Photo/Mike Stewart
Hyundai Motor Group, the biggest automaker in South Korea, started manufacturing electric vehicles at the $7.6bn (£7.4bn) site a year ago and partnered with LG Energy Solution to build an adjacent battery plant, which is set to open in 2026.
ICE spokesman Lindsay Williams confirmed the raid and said agents were focused on the construction site for the battery plant.
LG said in a statement that it was “closely monitoring the situation and gathered all relevant details”. The firm said it couldn’t immediately confirm how many of its employees or Hyundai workers had been detained.
“Our top priority is always ensuring the safety and well-being of our employees and partners. We will fully cooperate with the relevant authorities,” LG said.
Hyundai and LG’s battery joint venture, HL-GA Battery Company, said in a statement that it’s “cooperating fully with the appropriate authorities” and paused construction of the battery site to assist the investigation.
Operations at Hyundai’s electric vehicle manufacturing plant weren’t interrupted, plant spokesperson Biance Johnson said.
The raid is the latest in a series of sweeping ICE operations as part of President Donald Trump’s mass deportation agenda, which saw immigration officers raid farms, construction sites, restaurants and auto repair shops.
The US labour force lost more than 1.2 million immigrants from January through July, which includes legal and illegal immigrants, according to the Pew Research Centre, citing preliminary census data.