President Trump suggested on Tuesday that he could remove Federal Reserve Chairman Jerome Powell, one day before a critical interest rate decision in Washington by policymakers at the U.S. central bank.
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“Well, let’s see what he does,” he said, when a reporter asked him whether he wanted to demote Powell, whom he hand-picked in 2017.
On Wednesday, the Fed will conclude its two-day meeting, during which it’s widely expected to leave interest rates unchanged as it opens the door for a cut in July. Trump has repeatedly pressured policymakers to lower borrowing costs and frequently criticized the Fed for raising interest rates in December -- the fourth time it did so in 2018.
Bloomberg News reported earlier in the day that the White House, in February, had explored the legality of stripping Powell of his chairmanship and leaving him as a Fed governor, just two months after Trump discussed firing him.
“I’m not going to comment,” President Trump’s chief economic adviser Larry Kudlow told reporters. “It happened six months ago, and it’s not happening today, and therefore I have nothing to say about it.”
It’s unclear whether Trump has the power to fire Powell before his term ends in 2022. According to the law, the president can fire a Fed governor (for a cause) but it hasn’t been tested on the firing of a chair. Because the chair is considered to be a governor, it’s likely that it is legal.
Advisers, however, have reportedly warned Trump that firing Powell would rock the already volatile markets -- which is likely what he hopes to avoid by replacing the chair.