The Daily The Most Toxic Relationship in Washington
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Jul 17, 2025 
Colby Smith, a Federal Reserve and U.S. economy reporter for The Times, dives into the tumultuous relationship between President Trump and Fed Chair Jerome Powell. He discusses the legal uncertainties surrounding Trump's attempt to fire Powell and the ramifications for global economic stability. The conversation also highlights how political tensions, notably during election cycles and crises like the pandemic, complicate monetary policy, inflation, and interest rate decisions. Smith navigates the fine line between economic independence and political influence, revealing the ongoing struggle for balance.
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Trump Vs Powell's Toxic Clash
- Trump's economic agenda covers tariffs, tax cuts, and immigration, but he lacks control over the Fed's interest rate decisions.
- He sees Fed Chair Jay Powell as an enemy blocking his goals, fueling a toxic relationship.
Fed Rate Control's Power
- The Fed adjusts interest rates to manage inflation and recession risks, a powerful tool influencing economic activity.
- Presidents want control over rates because they accelerate or slow down the economy, impacting political and economic goals.
Powell's Appointment and Promise
- Trump broke tradition by appointing Jay Powell as Fed Chair, choosing a wealthy, pragmatic Republican.
- Powell accepted with a pledge to independent, objective decision-making, setting the stage for later conflict.