⁠"Neither does the market" Shark Tank investor Kevin O'Leary comments on the importance of an independent Fed

In his commentary on the escalating conflict between President Trump and Federal Reserve Chair Jerome Powell, Shark Tank investor Kevin O'Leary emphasized the significance of the Fed's independence in the face of political pressure to lower interest rates.

In a recent Instagram post, Kevin O'Leary offered his opinion as Trump attacks Powell and suggests firing him over rate decisions, saying that the market benefits from a system in which the Fed is kept independent from the executive branch.

“The market wants an independent Fed. Every administration, every executive office has always jawboned the Fed to lower rates... I don't wanna see the Fed fired, and neither does the market,” he wrote.

His remarks coincide with growing hostilities over interest rate policy between President Trump and Jerome Powell, the chairman of the Federal Reserve. The President has publicly chastised Powell for his hesitation to lower interest rates, even threatening to fire him if the economy slows and unemployment increases.

Kevin O'Leary, known for his straightforward business assessments on the popular ABC show where entrepreneurs pitch ideas to wealthy investors, has entered the conversation with a clear message about the value of maintaining the Fed's independence regardless of political pressure.

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The current economic dilemma and Kevin O'Leary’s take on it

The Federal Reserve faces a tricky balancing act in early 2025. Inflation remains persistent while economic indicators point to a slowdown.

The latest data paints a concerning picture. Manufacturing has contracted to 49 on the ISM index, down from previous months. The services sector, representing two-thirds of the economy, dropped to 50.8 in March from 53.5 in February.

Job losses reached 497,000 in the first quarter - the highest Q1 figure since 2009, according to Challenger, Gray & Christmas. The Atlanta Fed's GDPNow tool estimates first-quarter GDP at negative 0.4%, a significant drop from last summer's 3% growth.

President Trump hasn't minced words about his dissatisfaction with Powell's monetary policy approach. On his Truth Social platform, Trump called Powell "a major loser" and suggested he could quickly remove the Fed chair from his position.

"If I want him out, he'll be out of there real fast, believe me," Trump reportedly said when questioned about Powell's future.

The President believes lower interest rates are essential to offset any economic slowdown resulting from his tariff policies, particularly those announced on what he termed "Liberation Day" on April 2.

For Kevin O'Leary, the issue extends beyond personalities to market stability and investor confidence. On X (formerly Twitter), he wrote:

"There's a lot of jawboning about the Fed, which is always an independent body. Every executive jawbones the Fed, trying to get them to lower rates when it's politically expedient. It never works. The market doesn't want that."

The Shark Tank investor suggested alternative approaches to boost economic confidence. He recommended the White House focus on cutting a trade deal with India that could serve "as the blueprint for future trade with the EU and others" and begin "some dialogue with China. Even early signals would be better than silence."

Kevin O'Leary's message regarding the Fed was unambiguous:

"Stop trying to bully the Fed. Powell's not going anywhere — and the market wants him to stay independent."

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The value of independence

A key tenet of contemporary monetary policy is highlighted by O'Leary's defence of Fed independence. In order to prevent short-term political advantages from coming at the expense of long-term economic stability, political leadership and central banking decisions are kept apart.

Investors are more comfortable purchasing U.S. treasuries and other assets when they think that economic facts, not political pressure, determines monetary policy decisions. This confidence attracts global capital and helps maintain America's economic strength.

Kevin O'Leary's viewpoint serves as a reminder that markets work best when some institutions stay above the political fray and make decisions based on their legislated responsibilities rather than outside demands, as the White House and the Federal Reserve continue their tug-of-war.

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New episodes of Shark Tank Season 16 air Fridays on ABC.