Egyptian-American economist Mohamed El-Erian calls for Fed chairman's resignation
'By staying in office, is Powell defending independence or is he exposing it to greater threats?' he said, when asked by The National during a conference co-hosted by the World Bank and Centre for Global Development in Washington.
'If you see what has happened over the past few weeks is that the attacks have evolved from simply being attacks on him personally to being attacks on the institution.'
The White House has increased its pressure on the Fed to cut interest rates this year, with Mr Trump calling for low rates to help service the nation's debt, a concept known as fiscal dominance.
The Fed has paused its interest rate cuts after reducing policy in the final months of 2024, owing to uncertainty surrounding President Donald Trump's tariffs policies. The extended pause has drawn the increasing ire of the White House.
The administration's latest line of attack has been on continuing renovations at the Fed's headquarters in Washington, where costs have risen to $2.5 billion. Trump officials have accused Mr Powell of grossly mismanaging the Fed, citing the renovation, which some see as grounds for a sacking.
Mr Powell has linked cost overruns to unforeseen conditions such as more asbestos than anticipated, contamination in the soil and a higher-than-expected water table.
'This tension between the President and the chairman of the Fed, if it continues, it will suck in more elements of the Fed,' Mr El-Erian said.
Mr Powell has said that he intends to serve out his term as chairman, which expires in May 2026, and that Mr Trump has no legal authority to fire him.
Tensions simmered last week following reports that Mr Trump indicated to Republicans in the House of Representatives that he was open to firing Mr Powell. While Mr Trump confirmed he brought up the idea, he said it was 'highly unlikely' that he will sack the chairman.
The reports led to a brief spike in long-term yields and a weakening in the US dollar before they pared back some losses after Mr Trump's comments.
Those reported as possible replacements for the Fed chairman include National Economic Council head Kevin Hassett, former Fed governor Kevin Warsh, Treasury Secretary Scott Bessent and current Fed Governor Christopher Waller.
Mr El-Erian said the reported list of candidates would help calm market jitters.
'It's a very controversial argument, but it is underpinned by the need to maintain the critical importance of central banking,' he said.
In an interview with Fox Business earlier on Tuesday, Mr Bessent said Mr Powell should not resign.
'There's nothing that tells me that he should step down right now,' he said. 'His term ends in May. If he wants to see that through, I think he should. If he wants to leave early, I think he should.'
Mr Bessent on Monday had called for the 'entire review' of the Federal Reserve system's non-monetary policy operations. He also called for a review into the Fed's building renovations.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Khaleej Times
5 hours ago
- Khaleej Times
Trump, EU chief seek deal in transatlantic tariffs standoff
US President Donald Trump and EU chief Ursula von der Leyen prepared to meet Sunday in Scotland in a push to resolve a months-long transatlantic trade standoff that is going down to the wire. Trump has said he sees a 50-50 chance of reaching a deal with the European Union, having vowed to hit dozens of countries with punitive tariffs unless they hammer out a pact with Washington by August 1. The EU is currently facing the threat of an across-the-board levy of 30 percent from that date. Von der Leyen's European Commission, negotiating on behalf of the EU's member countries, has been pushing hard for a deal to salvage a trading relationship worth an annual $1.9 trillion in goods and services. Any deal with the United States will need approval by all 27 member states. EU ambassadors, on a visit to Greenland, were to meet Sunday morning to discuss the latest negotiations -- and again after any accord. Sunday's sit-down between Trump and the EU chief was to take place at 4:30 pm (1530 GMT) in Turnberry, on Scotland's southwestern coast, where Trump owns a luxury golf resort. The 79-year-old American leader said Friday he hoped to strike "the biggest deal of them all" with the EU. "I think we have a good 50-50 chance" of a deal, the president said, citing sticking points on "maybe 20 different things". He praised von der Leyen as "a highly respected woman" -- a far cry from his erstwhile hostility in accusing the EU of existing to "screw" the United States. But late-night EU talks with US Commerce Secretary Howard Lutnick on Saturday to hammer out the final details were "combative at times," The Financial Times reported. As of Saturday evening, there were "still quite a few open questions" -- notably on pharmaceutical sector tariffs, said one EU diplomat. Tariff levels on the auto sector were also crucial for the Europeans -- notably France and Germany -- and the EU has been pushing for a compromise on steel that could allow a certain quota into the United States before tariffs would apply. Baseline 15% According to European diplomats, the deal on the table involves a baseline levy of around 15 percent on EU exports to the United States -- the level secured by Japan -- with carve-outs for critical sectors including aircraft, lumber and spirits excluding wine. The EU would commit to ramp up purchases of US liquefied natural gas, along with a series of investment pledges. Hit by multiple waves of tariffs since Trump reclaimed the White House, the EU is currently subject to a 25-percent levy on cars, 50 percent on steel and aluminium, and an across-the-board tariff of 10 percent, which Washington threatens to hike to 30 percent in a no-deal scenario. The EU has focused on getting a deal with Washington to avoid sweeping tariffs that would further harm its sluggish economy, with retaliation as a last resort. While 15 percent would be much higher than pre-existing US tariffs on European goods -- at 4.8 percent -- it would mirror the status quo, with companies already facing an additional flat rate of 10 percent. Should talks fail, EU states have greenlit counter tariffs on $109 billion (93 billion euros) of US goods including aircraft and cars to take effect in stages from August 7. Brussels is also drawing up a list of US services to potentially target. Beyond that, countries like France say Brussels should not be afraid to deploy a so-called trade "bazooka" -- EU legislation designed to counter coercion through trade measures which involves restricting access to its market and public contracts. But such a step would mark a major escalation with Washington. Ratings dropping Trump has embarked since returning to power on a campaign to reshape US trade with the world. But polls suggest the American public is unconvinced, with a recent Gallup survey showing his approval rating at 37 percent -- down 10 points from January. Having promised "90 deals in 90 days," Trump's administration has so far unveiled five, including with Britain, Japan and the Philippines. Early Sunday, ahead of his meeting with Von der Leyen, Trump was out again on the golf course, having spent most of Saturday playing at Turnberry amid tight security. The trip to Scotland has put physical distance between Trump and the scandal around Jeffrey Epstein, the wealthy financier accused of sex trafficking who died in prison in 2019 before facing trial. In his heyday, Epstein was friends with Trump and others in the New York jet-set, but the president is facing backlash from his own MAGA supporters demanding access to the Epstein case files. With the uproar refusing to die down, a headline agreement with the EU -- in addition to bolstering Trump's dealmaker credentials -- could bring a welcome distraction.
Khaleej Times
6 hours ago
- Khaleej Times
Battling tariffs is no trivial pursuit for US games retailer
At a strip mall in Maryland, a miniature landscape extends across a table between Dash Krempel and his friend as a war game unfolds. But their hobby is becoming more expensive as US tariffs take a toll. Krempel, 29, told AFP the cost of models for tabletop games have surged from inflation, and continued rising since US President Donald Trump imposed sweeping tariffs on trading partners this year. UK-made figurines that cost $60 around three years ago now go for $94.50, he said. "Prices have gotten bigger," he added. "It's a very expensive hobby to begin with, so it's maybe pricing a lot of people out." Instead of buying more products, he now tries to support retailer Game Kastle College Park by renting tables to play in-store. For the shop's owner, Boyd Stephenson, stocking new board games, paints and hobby supplies has only become more challenging. To avoid the harshest of Trump's tariffs, some suppliers had to delay shipments or postpone new releases. As they raised their suggested retail prices, so has Stephenson at Game Kastle. About a fifth of his store's products have seen cost hikes, with increases ranging from 5 percent to 20 percent. "If we see higher prices or higher tariffs, I'm going to see higher wholesale prices, and then I have to raise my prices accordingly," he said. Asked what percentage of his store relies on imports, Stephenson replied: "Almost all of it." No capacity Stephenson estimates some 7,000 board games were released last year from 5,000 different companies. "You're really looking at 5,000 different approaches (to tariffs)," he said. "Some producers are saying, 'We're going to eat the cost.' Some producers are saying, 'We're passing the cost through all the way.' And other producers are doing some sort of mix of that." Like other US retailers, Stephenson could face more cost pressures come August 1, when steeper tariffs are set to hit dozens of economies like the European Union and India. The elevated rates mark an increase from the 10 per cent levy Trump imposed on goods from most economies in April. While China -- a crucial manufacturing hub for games -- is temporarily spared, Trump has separately imposed fresh 30 percent tariffs on products from the world's second biggest economy this year. US tariffs on Chinese products could return to higher levels from August 12 if officials fail to extend their truce. Yet, there is no quick fix to return manufacturing to the United States. "US manufacturers just don't have the capacity to do that anymore," said Stephenson, showing an intricate board game figurine. "Really, the people that are good at that, that's China," he said. "The best modeling paints come from Spain." "So if you see tariffs get put up on the EU, then all of a sudden I'm going to have to pay higher prices on modeling paint when I bring it into the country," he added. Trump has threatened the bloc with a 30 percent tariff. 'Universally bad' Stephenson tries to absorb some cost hikes, but said: "I have to be able to pay the staff, pay the electric company, pay the landlord." Trump's on-again, off-again approach to duties has also made suppliers' price changes more unpredictable. "What is always universally bad for business is uncertainty," Stephenson said. He usually stocks up on inventory ahead of the year-end holiday season, but expects to be more strategic with purchases this year to avoid unwelcome surprises. Many companies are delaying merchandise imports as they lack certainty, said Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation. "When the product is brought into the country and entered into commerce, you have 15 days to pay your tariff bill," he said. This causes problems when tariff rates change and businesses lack funds to pay for orders. Some businesses, and industry group the Game Manufacturers Association, have mounted legal challenges against Trump's blanket tariffs hitting various countries, noting nearly 80 percent of tabletop games sold in the US are made abroad. But such complaints are an uphill battle. "The damage, especially for small retailers, has been significant," Gold said.
Khaleej Times
6 hours ago
- Khaleej Times
Japan says $550 billion package in trade deal could finance Taiwanese chipmaker in US
Japan's $550 billion investment package agreed in this week's U.S. tariff deal could help finance a Taiwanese firm building semiconductor plants in the U.S., Japan's top trade negotiator Ryosei Akazawa said on Saturday. Japan agreed to the sweeping U.S.-bound investment initiative, which includes equity, loans and guarantees, in exchange for lower tariffs on its exports to the U.S. However, the structure of the scheme remains unclear. "Japan, the United States, and like-minded countries are working together to build supply chains in sectors critical to economic security," Akazawa told public broadcaster NHK. To that end, he said projects eligible for financing under the package are not limited to U.S. or Japanese firms. "For example, if a Taiwanese chipmaker builds a plant in the U.S. and uses Japanese components or tailors its products to meet Japanese needs, that's fine too," he said, without specifying companies. The U.S. is significantly reliant on Taiwan's TSMC for advanced chip manufacturing, raising economic security concerns due to geographic proximity to China. TSMC announced plans for a $100 billion U.S. investment with U.S. President Donald Trump at the White House in March, on top of $65 billion pledged for three plants in the state of Arizona, one of which is up and running. Japan will use state-owned Japan Bank for International Cooperation (JBIC) and Nippon Export and Investment Insurance (NEXI) for the investments. A recent law revision has enabled JBIC to finance foreign companies deemed critical to Japan's supply chains. Akazawa told NHK that equity investment would account for just about 1-2% of the $550 billion, suggesting that the bulk will come in the form of loans and guarantees. When asked about the White House statement that the U.S. would retain 90% of the profits from the package, he clarified that the figure refers only to returns on equity investment, which would represent a small fraction of the total. While Japan initially hoped to secure half of the returns, a loss from the concession on the profit-sharing would be marginal compared to the roughly 10 trillion yen ($67.72 billion) in tariff costs that could be avoided under the deal, he said. He added that Japan aims to deploy the $550 billion investments during Trump's current term.
