Maintaining stability is key to the economy. That's getting harder.
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Back in January of 2017, when Janet Yellen was chair of the Federal Reserve, she spoke to a group of economics teachers in a national town hall meeting. Consumers skilled in managing their finances are better prepared to weather bad times and stronger household finances overall can help sustain growth.

stabilize the economy, and mitigate an economic downturn. As she highlighted the importance of teaching kids about money and the economy, Yellen also highlighted the central job of the board of governors she chaired.

Stabilizing the economy and mitigating a downturn, of course, also happened to be among the Federal Reserve's primary responsibilities. The Federal Reserve Board of Governors and its chair try to stabilize the economy and mitigate a downturn by overseeing financial institutions and setting interest rates. And they do it independent of politics.

The current Federal Reserve Chair, Jerome Powell, underscored that independence last week when he spoke to the Economic Club of Chicago. We're never going to be influenced by any political pressure. People can say whatever they want. That's fine. That's not a problem. But we will do what we do.

strictly without consideration of political or any other extraneous factors. Powell didn't only underscore that independence, he demonstrated it when he said that President Donald Trump's signature economic policy, tariffs, would likely hurt the economy. The level of tariff increases announced so far is significantly larger than anticipated, and the same is likely to be true of the economic effects.

which will include higher inflation and slower growth. Higher inflation and slower growth. That assessment prompted a series of attacks from President Trump. Speaking to reporters in the Oval Office on Thursday, Trump threatened to fire Powell. I don't think he's doing the job. He's too late, always too late, a little slow, and I'm not happy with him. I let him know it, and

And in a series of posts on his Truth Social platform, he referred to Powell as a, quote, "major loser," "too late," and "wrong" for failing to cut interest rates.

Legally, the president can't fire the Federal Reserve chair. But on Friday, Trump's chief economic advisor Kevin Hassett told reporters that the White House is exploring how to fire Powell despite the legal guardrails on his position. Then Tuesday afternoon, Trump backpedaled saying, quote, I have no intention of firing him.

Consider this. The job of the Federal Reserve Chair is to maintain calm and stability in the U.S. economy. Jerome Powell may be fighting an uphill battle. From NPR, I'm Ari Shapiro.

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It's Consider This from NPR. Federal Reserve Chair Jerome Powell has been fighting inflation for years, and often it seems like there's a curveball just as things are getting better. The latest is tariffs. Today, the International Monetary Fund is supporting Powell's assessment with a gloomy forecast. The IMF warns that Trump's tariffs will lead to slower economic growth and a longer battle to slow inflation. And the IMF is also warning that the

NPR's Scott Horsley covers the economy, and I spoke to him about Powell's job security and where the economy might be headed. How big a blow to the global economy is this trade war? It's significant. The IMF is not going so far as to project a global recession, but it is forecasting a big hit to global trade and slower economic growth as a result. President Trump's now imposed import taxes on almost everything the U.S. buys from other countries.

And the IMF's chief economist, Pierre-Olivier Garincha, says the haphazard way these tariffs have been rolled out have only added to their drag on the economy. Beyond the abrupt increase in tariffs, the surge in policy uncertainty is a major driver of the economic outlook. If sustained, the increase in trade tensions and uncertainty will slow global growth significantly.

And the IMF has downgraded its growth forecast for the U.S. this year by almost a full percentage point. It's also projecting higher prices, so we could see a combination of slow growth and stubborn inflation, which would be a real challenge for the Federal Reserve. Why is that? Well, ordinarily, the Fed's answer to slow growth is to cut interest rates, but its answer to fighting inflation is to raise interest rates. So if it's battling both at the same time, it could be sort of caught in this tug-of-war.

The IMF stressed that central banks around the world are going to have to remain agile and independent of political pressure. Now, in the U.S., President Trump has been trying to ratchet up the political pressure on the Fed to cut interest rates. Trump's been blasting the central bank in social media posts. In one post, he called Fed Chairman Jerome Powell a major loser today.

Now, all that has some investors worried that the president might actually try to fire Powell and replace him with someone more malleable. Speaking to the Economic Club of New York last week, Chief Economist Mark Zandi of Moody's said firing Powell would be a recipe for a market meltdown.

I think that would be devastating if he's not able to remain in place until his term is over. I think that would be highly counterproductive and lead to more turmoil in financial markets and ultimately a much weaker economy. And we got a little taste of that yesterday, Ari, when Trump once again went after the Fed chairman and the stock market just plummeted. Investors in general have been hostile to the president's trade war, and they really don't like it when Trump tries to monkey with the Federal Reserve.

You know, the president uses social media to comment about all kinds of things. Why is the Fed different? Why shouldn't he comment on the Fed? He can comment all he likes. He just can't threaten the Fed chairman's job or otherwise try to bend the central bank to his will. Now, Trump did say this evening he has no intention of firing Powell.

The Fed was designed to be insulated from political pressure so it can do the unpopular thing when necessary, that is keep interest rates high to bring inflation under control. Powell told the Economic Club of Chicago last week most lawmakers get that. Fed independence is very widely understood and supported in Washington in Congress where it really matters.

And, you know, the point is we can make our decisions and we will only make our decisions to best serve the American people. The case in point is Louisiana Senator John Kennedy, who sits on the banking committee, which oversees the Fed. Kennedy is a Republican, but he told NBC's Meet the Press over the weekend he doesn't think Trump or any president has the authority to remove the Federal Reserve chairman. My experience with Jay Powell is that he's got tiger butt. He's going to do what he thinks is right.

And he's not going to go down in history as the Federal Reserve chairman that allowed inflation to become wild as a march hare. And he's going to do what he thinks he's got to do. Powell also has the Supreme Court precedent on his side, although the Trump administration's urging the high court to reconsider. Well, after the big sell-off yesterday, the stock market rebounded today. Is that a vote of confidence in Powell?

Investors are really voting for some relief in the trade war. Treasury Secretary Scott Besson has emerged as the administration's good cop on trade, and Bloomberg and others reported today that Besson expects some de-escalation in the standoff between the U.S. and China, suggesting these triple-digit tariffs between the world's two biggest economies are not sustainable.

So investors like the sound of de-escalation, and the Dow Jones Industrial Average jumped more than 1,000 points, or two and two-thirds percent. That's NPR's Scott Horsley. This episode was produced by Michael Levitt with audio engineering by Jimmy Keeley. It was edited by Courtney Dorning and Raphael Nam. Our executive producer is Sammy Yenigan. It's Consider This from NPR. I'm Ari Shapiro.

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