Trump v Powell: What’s behind their spat?

Published

3 months ago

April 23, 2025

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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.

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.

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.

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.

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.

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.

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.

US

Donald Trump praises Liberian president’s English – the country’s official language

Published

48 mins ago

July 10, 2025

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Donald Trump praises Liberian president's English - the country's official language

Donald Trump has praised the Liberian president’s command of English – the West African country’s official language.

The US president reacted with visible surprise to Joseph Boakai’s English-speaking skills during a White House meeting with leaders from the region on Wednesday.

After the Liberian president finished his brief remarks, Mr Trump told him he speaks “such good English” and asked: “Where did you learn to speak so beautifully?”

Mr Trump seemed surprised when Mr Boakai laughed and responded he learned in Liberia.

The US president said: “It’s beautiful English.

“I have people at this table who can’t speak nearly as well.”

Mr Boakai did not tell Mr Trump that English is the official language of Liberia.

The country was founded in 1822 with the aim of relocating freed African slaves and freeborn black citizens from the US.

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Mr Trump promised the leaders of Liberia, Senegal, Gabon, Mauritania and Guinea-Bissau a pivot from aid to trade at the surprise meeting.

He described the countries as “all very vibrant places with very valuable land, great minerals, and great oil deposits, and wonderful people”.

Later asked by a reporter if he’ll visit the continent, Mr Trump said, “At some point, I would like to go to Africa.”

But he added that he’d “have to see what the schedule looks like”.

Trump’s predecessor, President Joe Biden, promised to go to Africa in 2023, but only fulfilled the commitment by visiting Angola in December 2024, just weeks before he left office.

US

Gaza permanent ceasefire ‘questionable’, says Israeli government

Published

48 mins ago

July 10, 2025

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Gaza permanent ceasefire 'questionable', says Israeli government

The Israeli government believes the chances of achieving a permanent ceasefire in Gaza are “questionable”.

The pessimistic assessment, in a top-level Israeli government briefing given to Sky News, comes as the Israeli Prime Minister prepares to leave Washington DC after a four-day visit which had begun with the expectation of a ceasefire announcement.

Benjamin Netanyahu will leave the US later today with the prospect of even a temporary 60-day ceasefire looking extremely unlikely this week.

Within “a week, two weeks – not a day” is how it was framed in the background briefing late on Wednesday.

Crucially, though, on the chances of the ceasefire lasting beyond 60 days, the framing from the briefing was even less optimistic: “We will begin negotiations on a permanent settlement. But we achieve it? It’s questionable, but Hamas will not be there.”

Sky News has spoken to several Israeli officials at the top level of the government. None will be drawn on any of the details of the negotiations over concerns that public disclosure could jeopardise their chances of success.

But I have been given a very clear understanding of Mr Netanyahu’s thinking.

The Israeli position is that a permanent ceasefire (beyond the initial 60 days, which itself is yet to be agreed) is only possible if Hamas lays down its arms. “If they don’t, we’ll proceed [with the war],” said a source.

The major sticking point in the talks between Hamas and Israel is the status of the Israel Defence Forces (IDF) inside Gaza during the 60-day ceasefire and beyond, should it last longer.

The latest Israeli proposal, passed to Hamas last week, included a map showing the proposed IDF presence inside Gaza during the ceasefire.

This was rejected by Hamas and by Trump’s Middle East envoy, Steve Witkoff, who reportedly told the Israelis that the redeployment map “looks like a Smotrich plan”, a reference to the extreme-right Israeli finance minister, Bezalel Smotrich.

My briefing of Mr Netanyahu’s position is that he has not shifted in terms of Israel’s central stated war aims. The return of the hostages and eliminating Hamas are the key objectives.

But in a hint of how hard it will be to reconcile the differences, it was clear from my briefing that no permanent ceasefire is possible in the Israeli government’s view without the complete removal of Hamas as a political and military entity.

Hamas is not likely to negotiate its way to oblivion.

On the status of the Israeli military inside Gaza, a senior Israeli official told Sky News: “We would want IDF in every square metre of Gaza, and then hand it over to someone.”

It was clear to me that Mr Netanyahu wants his stated position to be that his government has no territorial ambition for Gaza.

One quote to come from my briefing, which I am only able to attribute to a senior Israeli official, says: “[We] don’t want to govern Gaza… don’t want to govern, but the first thing is, you have to defeat Hamas.”

Another clear indication of Mr Netanyahu’s position – a quote from the briefing, attributable only to a senior Israeli official: “You cannot have victory if you don’t clear out all the fighting forces.

“You have to go into every square inch unless you are not serious about victory. I am. We are going to defeat them. Those who do not disarm will die. Those who disarm will have a life.”

On the future of Gaza, it’s clear from my briefings that Mr Netanyahu continues to rule out the possibility of a two-state solution “for the foreseeable future”.

The Israeli government assessment is that the Palestinians are not going to have a state “as long as they cling to that idea of destroying our state”.

On the most controversial aspect of the Gaza conflict – the movement of the population – the briefing revealed that Mr Netanyahu’s view is that 60% of Palestinians would “choose to leave” but that Israel would allow them to return once Hamas had been eliminated.

“It’s not forcible eviction, it’s not permanent eviction,” a senior Israeli official said.

Critics of Israel’s war in Gaza say that any removal of Palestinians from Gaza, even if given the appearance of being “voluntary”, is in fact anything but, because the strip has been so comprehensively flattened.

Reacting to Israeli Defence Minister Katz’s recent statement revealing a plan to move Palestinians into a “humanitarian city” in southern Gaza, and not let them out of that area, the official wouldn’t be drawn, except to say: “As a permanent arrangement? Of course not.”

US

Gaza permanent ceasefire ‘questionable’, says senior Israeli official

Published

4 hours ago

July 10, 2025

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A senior Israeli official has issued a less-than-optimistic assessment of the permanency of any ceasefire in Gaza.

Speaking in Washington on condition of anonymity, the senior official said that a 60-day ceasefire “might” be possible within “a week, two weeks – not a day”.

But on the chances of the ceasefire lasting beyond 60 days, the official said: “We will begin negotiations on a permanent settlement.

“But we achieve it? It’s questionable, but Hamas will not be there.”

Israeli Prime Minister Benjamin Netanyahu is due to conclude a four-day visit to Washington later today.

There had been hope that a ceasefire could be announced during the trip. US President Donald Trump has repeatedly stated that it’s close.

Speaking at a briefing for a number of reporters, the Israeli official would not be drawn on any of the details of the negotiations over concerns that public disclosure could jeopardise their chances of success.

The major sticking point in the talks between Hamas and Israel is the status of the Israel Defence Forces (IDF) inside Gaza during the 60-day ceasefire and beyond, should it last longer.

The latest Israeli proposal, passed to Hamas last week, included a map showing the proposed IDF presence inside Gaza during the ceasefire.

The official repeated Israel’s central stated war aims of getting the hostages back and eliminating Hamas. But in a hint of how hard it will be to reconcile the differences, the official was clear that no permanent ceasefire would be possible without the complete removal of Hamas.

“We will offer them a permanent ceasefire,” he told Sky News. “If they agree. Fine. It’s over.

“They lay down their arms, and we proceed [with the ceasefire]. If they don’t, we’ll proceed [with the war].”

On the status of the Israeli military inside Gaza, the official said: “We would want IDF in every square meter of Gaza, and then hand it over to someone…”

He added: “[We] don’t want to govern Gaza… don’t want to govern, but the first thing is, you have to defeat Hamas…”

The official said the Israeli government had “no territorial designs for Gaza”.

“But [we] don’t want Hamas there,” he continued. “You have to finish the job… victory over Hamas. You cannot have victory if you don’t clear out all the fighting forces.

“You have to go into every square inch unless you are not serious about victory. I am. We are going to defeat them. Those who do not disarm will die. Those who disarm will have a life.”

On the future of Gaza, the official ruled out the possibility of a two-state solution “for the foreseeable future”.

“They are not going to have a state in the foreseeable future as long as they cling to that idea of destroying our state. It doesn’t make a difference if they are the Palestinian Authority or Hamas, it’s just a difference of tactics.”

On the most controversial aspect of the Gaza conflict – the movement of the population – the official predicted that 60% of Palestinians would “choose to leave”.

But he claimed that Israel would allow them to return once Hamas had been eliminated, adding: “It’s not forcible eviction, it’s not permanent eviction.”

Critics of Israel’s war in Gaza say that any removal of Palestinians from Gaza, even if given the appearance of being “voluntary,” is in fact anything but, because the strip has been so comprehensively flattened.