Fed Chair Powell might have quietly won Trump’s one-sided war with the central bank after the president says he has ‘no intention’ of firing him

• Donald Trump backed off from his threats to fire Federal Reserve Chair Jay Powell after market volatility, confirming Powell would remain through his term ending in 2026. Investors grew concerned that the Oval Office's rhetoric may one day impact the independence of the central bank.

It seems Jay Powell will walk away unscathed from a months-long showdown with Donald Trump, after the president said he didn't plan on ousting Powell from his role as chairman of the Fed.

On Monday Trump branded Powell a "major loser" after previously threatening to fire him from his position as head of the Federal Open Market Committee (FOMC).

Powell has responded without direct confrontation—in the past he only went so far as to say the White House couldn't legally terminate his contract.

However Trump retreated following market volatility earlier this week, with investors likely acting on fears that the president may drag the independence of the central bank into question.

After the Dow and S&P 500 tanked Monday, Trump began steadying the ship Tuesday, saying: "I have no intention of firing [Powell]. I would like to see him be a little more active in terms of of his idea to lower interest rates. This is a perfect time to lower interest rates.

"If he doesn't is it the end? No, no it's not, but it would be good timing."

This was a departure from Trump's message in the days prior when he wrote on his social media platform, Truth Social, that Powell was a "major loser." This followed a similar outburst—also on Truth Social—last week, in which Trump wrote Powell's "termination cannot come fast enough."

Speaking to reporters in the White House later that day, Trump doubled down: “I’m not happy with him. I let him know it. If I want him out, he'll be out of there real fast believe me."

The increasing criticism out of the Oval Office towards the Fed and FOMC spooked investors, who may have feared Trump's rhetoric was a pre-cursor to undermining the federally mandated independence of the central bank. Such instances have occurred in the past—under President Nixon, for example—and had dire consequences for the economy.

Markets regained some confidence following Trump's confirmation that Powell will see out the rest of his term as chairman (finishing in May 2026), with the S&P 500 finishing up 2.5% yesterday.

Why does Trump care so much about Powell?

Trump's preoccupation with Powell and the FOMC began on the campaign trail, when he warned that if the FOMC cut the base rate ahead of the election then Powell's job would be on the line.

That's because the FOMC has a powerful tool in its arsenal: Power over the base rate, which it can wield to achieve its aims of maximum employment and an inflation rate of 2%.

The base rate has far-ranging ramifications on the economy, from the bond market to mortgages to consumer spending and economic activity.

After a period of interest rates rising to their highest in some two decades in the wake of COVID, the FOMC cutting the base rate—as it did last year—was seen as a sign that the economy had reached steadier territory.

In the months running up to the election, Trump likely didn't want the Democrat camp to receive the boost in economic outlook a rate cut would provide and so lobbied against it. Once he won the Oval Office, however, pressure from Trump to cut rates began and has continued since.

Trump's changing demands exemplify why the Fed is mandated to steer clear of politics: So that the economic lever of the base rate is kept out of the political cycle and the health of the economy is ensured in the longer term. As such, Trump's requests have fallen on deaf ears, and likely will continue to.

Powell and his peers on the FOMC have said time and again that they are politically independent and their decisions are based on data and their economic outlook alone.

While tariffs, a Trump policy, have impacted their view when it comes to inflation, they have not commented on whether the policies are good or bad. As Powell put it in a speech earlier this month: "The new administration is in the process of implementing substantial policy changes in four distinct areas: trade, immigration, fiscal policy, and regulation… It is not our role to comment on those policies. Rather, we make an assessment of their likely effects, observe the behavior of the economy, and set monetary policy in a way that best achieves our dual-mandate goals."

This story was originally featured on Fortune.com