President Trump again said he had the power to fire or demote Federal Reserve Chairman Jerome Powell, adding new fuel to his long-running feud with the head of the U.S. central bank as the coronavirus roils markets across the world and threatens to shove the nation into a recession.
Trump said during a Saturday news conference that he did not intend to fire Powell, but that he was "not happy with the Fed" and its response to market turmoil. The Dow Jones Industrial Average suffered its worst week since October 2008, ending with a 12 percent drop and erasing the majority of its gains from 2019.
"I have the right to do that or the right to remove him as chairman," Trump told reporters. "He has, so far, made a lot of bad decisions, in my opinion."
It's a familiar threat from the president, who has frequently tried to pressure policymakers to drop interest rates to zero, or even send them into negative territory. But to do so as the coronavirus, which causes a disease known as COVID-19, rattles the global economy was particularly striking.
"If he removed Jerome Powell, it would be hugely destabilizing to markets," Ernie Tedeschi, a policy economist at Evercore ISI in Washington, told The New York Times. "The market trusts Jerome Powell to do what monetary policy can do. Jerome Powell gets it."
A Fed chair has never been removed by a president, and Trump's attacks on Powell, whose term expires in 2022, are mostly unprecedented.
Under the Federal Reserve Act, which was signed into law in 1913, the president has the power to appoint seven members to the Fed's board of governors, with the approval of the Senate. It doesn't explicitly give the president the power to remove Fed members, but indicates it could be possible.
"The President shall fix the term of the successor to such member at not to exceed fourteen years, as designated by the President at the time of nomination," Section 10 of the act reads, adding: "Thereafter each member shall hold office for a term of fourteen years from the expiration of the term of his predecessor, unless sooner removed for cause by the President."
Earlier this month, Powell announced an emergency 50-basis-point cut to the benchmark federal funds rate, sending it to a range of just 1 percent to 1.25 percent. It marked the first time since the financial crisis that the Fed has reduced its key rate outside of scheduled policy-setting meetings.
Policymakers are scheduled to hold their two-day meeting this week, during which they're widely expected to slash rates to 0 percent to 0.25 percent.