Things are only getting tougher for Chair Jerome Powell

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Life isn’t getting any easier for Federal Reserve Chairman Jerome Powell.

The central bank chief, fresh off a year of intense criticism from President Donald Trump and a sharp rebuke from financial markets, now faces a landscape full of mines that could detonate in any direction.

The Fed raised its benchmark interest rate four times in 2018, earning him Trump’s scorn, even as the market remained patient. That patience expired in October, though, when the chair’s comments sparked a belief that the Fed was ignoring some troubling signs in financial markets that were pointing to a downturn. More difficulties came in December when Powell implied that the Fed was not considering ending a program of reducing the bond holdings on its balance sheet.

“I do feel sorry for Chair Powell,” Mohamed El-Erian, chief economic advisor at Allianz, told CNBC’s “Squawk Box ” in a Monday interview. “Not only does he have to navigate this divergence of growth, and it’s a pretty tricky balance to strike, but he has to do so with an FOMC that’s all over the place.”

The new year, though, brought some more tranquil moments.

Markets have rallied, but it’s brought little peace to Powell, who continues to find himself under pressure with more White House heat and the prospect of a divided group of policymakers he will have to manage.

“The Fed solidified its U-turn on March 20, hoping to get off the stage, not to be in the spotlight. What do we find now? A massive tug-of-war,” El-Erian said. “On the one hand, the White House is pressing for a 50 basis point cut. Not only do they say ‘cut,’ but they specify how much you should cut. On the other, Fed officials are saying not only are we unlikely to cut this year, but hikes aren’t off the table, and you don’t want that to develop.”

Starting in January, the FOMC took a dovish turn in which it said it was considering winding down the balance sheet reduction and would be “patient” in raising rates. In March, the committee went full-circle, indicating that two projected rate hikes had been knocked down to zero and the balance sheet reduction would end in September.

Powell himself sounded adamant at his March news conference that it would take a lot for him to push for rate hikes. While he and others have voiced confidence in the U.S., they worry about developments overseas spilling over domestically and taking the momentum out of an economy that in 2018 saw some of its fastest growth since the financial crisis.

A wild card in the situation is the president, who is now enlisting his top advisors, like Kudlow, to pressure the Fed. Trump has said the economy would be growing at an even faster pace except for the Fed’s rate hikes, which have totaled nine since the normalization process began in 2015.

Trump is going to feel ‘emboldened’