US President Donald Trump would put the credibility of the US dollar on the line and destabilize the US economy if he fired US Federal Reserve Chair Jerome Powell, French Minister of Economics and Finance Eric Lombard warned.
“Donald Trump has hurt the credibility of the dollar with his aggressive moves on tariffs — for a long time,” Lombard said in an interview published in ***La Tribune Dimanche*** yesterday. If Powell is pushed out “this credibility will be harmed even more, with developments in the bond market.”
The result would be higher costs to service the debt and “a profound disorganization of the country’s economy,” Lombard said, adding that the consequences would bring the US sooner or later to talks to end the tensions.
Photo: REUTERS
Lombard’s comments come after Trump, frustrated with Powell’s caution to cut US interest rates, posted on social media on Thursday that Powell’s “termination couldn’t come quickly enough.”
It was not clear whether he meant he wanted to fire Powell or was eager for the end of his term, which is in May next year.
US National Economic Council Director Kevin Hassett said on Friday that Trump was studying whether he could fire him.
French President Emmanuel Macron has opposed Trump on a series of issues including Ukraine, trade and even offered refuge in France for US-based scientists whose federal research funding has been cut.
Even so, Lombard’s comments are unusually direct about US domestic matters.
On tariffs, Lombard said the 10 percent tariffs Trump has imposed on imports from the EU do not constitute “common ground” and that Europe’s goal is for a free-trade zone with the US.
The 10 percent level is “a huge increase that isn’t sustainable for the US economy and represents major risks for global trade,” Lombard said.
He also called on European CEOs to show “patriotism” and work with their governments so the region does not lose out.
The IMF is set to lower its outlook for economic growth in new projections to be released tomorrow.
“Our new growth projections will include notable markdowns, but not recession,” IMF managing director Kristalina Georgieva said on Thursday. “We will also see markups to the inflation forecasts for some countries. We will caution that protracted high uncertainty raises the risk of financial-market stress.”
Georgieva’s remarks came after Powell said on Wednesday that the US central bank is “well positioned to wait for greater clarity” before considering changes to monetary policy, while European Central Bank President Christine Lagarde could not say whether uncertainty has peaked.
Georgieva is hoping the coming days, which also feature a meeting of Group of 20 finance chiefs, might lower the temperature in global trade relations.
“We need a more resilient world economy, not a drift to division,” she said, adding that the Washington gatherings “provide a vital forum for dialogue at a vital time.”
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