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Tensions between US President Donald Trump and US Federal Reserve chair Jerome Powell have hit a new high.

But why has the pair’s relationship deteriorated so badly? And what are the issues behind their spat?

Sky News correspondents Mark Stone and Paul Kelso take a closer look…

Powell’s independence is a problem for control-obsessed Trump

Mark Stone, US correspondent

The feud between Donald Trump and Jerome Powell is as predictable as it is serious.

Jerome ‘Jay’ Powell holds one of the most powerful and influential positions in the world.

As chair of the US Federal Reserve, he wields the levers which control global economic stability, such is the power of the US dollar.

A trader works on the floor at the New York Stock Exchange, as a screen broadcasts a live interview with US Federal Reserve Chair Jay Powell on 16 April 2025. File pic: Reuters
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A trader works on the floor at the New York Stock Exchange. File pic: Reuters

The position comes with a huge amount of autonomy. Fed independence is seen to be paramount.

For a full-control-obsessed president like Donald Trump, that’s a problem.

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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.

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
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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.

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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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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

Paul Kelso, business and economics correspondent

Donald Trump’s disparagement 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.

Jay Powell in Washington DC in March. File pic: Reuters
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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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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.

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US and EU agree trade deal, says Donald Trump

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US and EU agree trade deal, says Donald Trump

The United States and European Union have agreed a trade deal, says Donald Trump.

The announcement was made as the US president met European Commission chief Ursula von der Leyen at one of his golf resorts in Scotland.

Speaking after talks in Turnberry, Mr Trump said the EU deal was the “biggest deal ever made” and it will be “great for cars”.

The US will impose 15% tariffs on EU goods into America, after Mr Trump had threatened a 30% levy.

He said there will be an EU investment of $600bn in the US, the bloc will buy $750bn in US energy and will also purchase US military equipment.

Mr Trump had earlier said the main sticking point was “fairness”, citing barriers to US exports of cars and agriculture.

He went into the talks demanding fairer trade with the 27-member EU and threatening steep tariffs to achieve that, while insisting the US will not go below 15% import taxes.

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For months, Mr Trump has threatened most of the world with large tariffs in the hope of shrinking major US trade deficits with many key trading partners, including the EU.

Ms von der Leyen said the agreement would include 15% tariffs across the board, saying it would help rebalance trade between the two large trading partners.

In case there was no deal and the US had imposed 30% tariffs from 1 August, the EU has prepared counter-tariffs on €93bn (£81bn) of US goods.

Ahead of their meeting on Sunday, Ms von der Leyen described Mr Trump as a “tough negotiator and dealmaker”.

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Michigan: 11 people stabbed in US supermarket – with six in critical condition

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Michigan: 11 people stabbed in US supermarket - with six in critical condition

At least 11 people have been stabbed at a Walmart supermarket in Michigan, with six in a critical condition.

Officials say a suspect is in custody – and at this stage, it is believed the attack was a “random act” that involved a folding-style knife near the checkout area.

Sheriff Michael Shea told reporters: “Eleven is 11 too many, but thank God it wasn’t more.”

Pic: AP
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Pic: AP

The suspect, who is from Michigan, is not known to police – and was captured within three minutes thanks to “citizen involvement”.

The attack unfolded in Traverse City – and Tiffany DeFell, who was in the car park at the time, described scenes of chaos.

“It was really scary. Me and my sister were just freaking out,” she said. “This is something you see out of the movies.”

Beyond the six people in a critical condition, it is believed the remaining five were seriously hurt. All 11 are still being treated in hospital.

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Pic: AP
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Pic: AP

Michigan Governor Gretchen Whitmer said: “Our thoughts are with the victims and the community reeling from this brutal act of violence.”

A Walmart spokesperson added that the retailer is working closely with law enforcement.

“Violence like this is unacceptable. Our thoughts are with those who were injured and we’re thankful for the swift action of first responders,” a statement said.

Pic: AP
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Pic: AP

At this stage, the ages of the victims is unclear – but it is not thought any of the victims were Walmart employees.

Traverse City is about 255 miles northwest of Detroit.

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Plane plunges 300ft in 36 seconds to avoid another aircraft

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Plane plunges 300ft in 36 seconds to avoid another aircraft

A US passenger plane made a dramatic plunge minutes after take-off to dodge another aircraft – injuring two cabin crew and causing passengers to shoot out of their seats.

The Southwest flight had just taken off from Burbank in California when the pilot received an alert about a nearby plane.

Data from FlightAware shows the aircraft dropped by 91m (300ft) in just 36 seconds. Those on board said they felt panicked, and some feared the plane was about to crash.

Comedian Jimmy Dore posted on X: “Pilot had to dive aggressively to avoid mid-air collision … myself and plenty of people flew out of their seats and bumped heads on ceiling, a flight attendant needed medical attention.”

Stef Zambrano saw a woman who wasn’t wearing her seatbelt thrown out of her seat, who then said: “I want to get off this plane. I want to be on the ground.”

Another passenger, Steve Ulasewicz, told NBC Los Angeles that it felt like the plane was in freefall for 10 seconds.

“People were screaming. You know, it was pandemonium. People thought the plane was going down,” he added.

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The aircraft was able to continue to its destination of Las Vegas, where it safely landed without any further incident.

It is believed the Boeing 737 was in the same vicinity as a Hawker Hunter Mk. 58, a British fighter jet.

Southwest is now working with the Federal Aviation Administration “to further understand the circumstances” of the event.

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January: Footage of Washington plane crash

This is the second time in a week that a passenger plane has had to make abrupt flight manoeuvres to avoid a potential mid-air collision.

Concerns have been raised about aviation safety in the US following a series of recent incidents.

In January, a mid-air collision in Washington DC killed 67 people.

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