In a surprise move, US President Donald Trump, a fierce critic of Fed President Jerom Powell, will visit US Federal Bank on Thursday.

Trump has repeatedly criticized Powell for not lowering interest rates in the US, calling him “stupid” on Tuesday and publicly stating that he is thinking of fired him, Reuters notes.

The Republican president, during his first term, proposed Powell about the bank’s leadership, but has since changed his mind due to disagreements about interest rates and the economy. Among Trump’s term of office, Democratic President Joe Biden proposed Powell for a second term.

Adding oil to the fire of Trump’s rage, White House officials accused the Fed of mismanagement of the renovation of two historic buildings in Washington, implying poor supervision and possible fraud. White House budget director Russell Vot calculated the cost of over $ 700 million, an amount that continues to grow. “

White House staff chief, James Blair, said this week that government officials would visit the Fed on Thursday, but did not report whether the president would participate. In a program given in the media on Wednesday night, the White House announced that Trump would visit the Fed on Thursday. However, he did not make clear if Trump would meet with Powell.

Intimidation tactic

The initial reaction of the market to the news of Trump’s visit was restrained, with the yield of 10 -year reference bonds remaining stable at 4,387% during the trading hours in Asia and the dollar slightly receding.

Trump’s public criticism of Powell and his rumor of dismissal have previously upset financial markets as they have threatened a basic foundation of the global financial system: the independence of central banks and their freedom from political interventions.

Finance Minister Scott Bessed said on Wednesday that the Trump government is in no hurry to appoint a new president to replace Powell, whose term as head of the bank expires in May 2026. Besed said the government would probably say.

“The little turmoil caused by Trump’s visit may have passed, as Besed claims that Trump has no intention of firing Powell,” said Matt Simpson, a senior market analyst at City Index in Brisbane. “But that doesn’t mean Powell has escaped. Trump’s announcement of a personal visit to the Fed headquarters a few days after the attack on Powell and the renovation looks less like political movement and more with a tactic of bullying, “he said.

Usually, US presidents avoid commenting on Fed’s policy, in respect of respect for the bank’s autonomy, but Trump, whose way of governing violates political norms, has not followed this example.

Since his return to the Presidency in January, Trump has attacked institutions, from law firms to universities and the media, in an attempt to reshape American society according to his vision.

Is pushing to reduce interest rates

The Supreme Court, in a recent opinion, appeared to indicate that Trump could not dismiss Powell for no serious reason. Since then, the cost of the cost of renovating the Fed headquarters has become the focus of the government’s pressure campaign to the Fed president.

Trump has stated that Fed would like to reduce the basic interest rate to 1%from the current range of 4.25%-4.50%to reduce government borrowing costs. This would allow the government to fund the rising deficits that are expected to arise from the law on costs and tax relief. However, such a low interest rate of the Fed is usually an indication that a country is facing financial problems.

None of the 19 Fed policy managers predicts interest rates at the level that Trump wants. Their latest forecasts last month showed that most expect the interest rate not to drop below the range of 3.25% -3.50% by the end of next year.

The Fed meets next week and is expected to keep interest rates in the current range. Investors estimate that the bank will resume reducing interest rates in September.

As Trump increased the pressure on Powell this week, his immediate predecessors, Ben Bernanki and Janet Gellen, said Trump’s demands on “radical” interest rates and threats to dismiss Powell are “risky”.