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April 22, 2025 | 11:02 am
TEMPO.CO, Jakarta - Tensions between U.S. President Donald Trump and Federal Reserve Chair Jerome Powell are making waves in global markets, and Indonesia's rupiah is feeling the impact. Trump has threatened to fire Powell over the Fed’s refusal to cut interest rates—a move he believes is key to boosting the U.S. economy. But Powell is standing firm, resisting pressure to intervene in what is supposed to be an independent central bank.
Currency analyst Ibrahim Assuaibi said the conflict could actually play to the rupiah’s advantage.
"This clash between the Trump administration and the Fed is turning out to be positive for the rupiah, despite ongoing trade wars and geopolitical tensions," he told reporters on Monday, April 21.
According to Ibrahim, U.S. law bars the government from interfering with the Federal Reserve, which serves as a key benchmark for the global economy. Should Trump push too far, he warned, investors may begin dumping the dollar.
The feud escalated after Trump introduced a new round of reciprocal tariffs and took to social media to demand lower interest rates. “This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates. He is always ‘late,’ but he could now change his image, and quickly,” Trump posted on Truth Social. “Energy prices are down, Interest Rates are down, Inflation is down, even Eggs are down 69%, and Jobs are UP, all within two months—A BIG WIN for America. CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!”
Powell, however, has voiced concern that tariffs could drive up inflation while slowing economic growth. “For now, we are in a wait-and-see position before considering any policy adjustments,” Powell said in a speech at the Economic Outlook event on Wednesday, April 16, as published on federalreserve.gov.
"We continue to analyze incoming data, forward projections, and the balance of risks," he said.
In response, Trump floated the idea of removing Powell from his position altogether. On Friday, April 18, White House economic advisor Kevin Hassett confirmed that Trump and his team are actively exploring whether they have the authority to fire the Fed governor.
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