If President Trump asked Federal Reserve Chair Jerome Powell to resign, would the head of the U.S. central bank oblige?
“No,” Powell said on Friday, during a joint interview along with former Fed Chairs Janet Yellen and Ben Bernanke in Atlanta. Powell did not comment further on the topic.
In late December, Bloomberg reported that Trump was considering firing Powell, after Fed policymakers voted for the fourth time to hike short-term interest rates -- despite pressure from the White House to do otherwise. Treasury Secretary Steven Mnuchin denied the report.
It was the latest in a series of attacks levied by Trump against Powell, whom he hand-picked a year ago to replace Yellen. Trump blames the Fed for curtailing economic growth by raising the benchmark federal funds rate.
It’s unclear whether Trump has the power to fire a Fed chair. According to the law, the president can fire a Fed governor for 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.Trump’s frustration with Powell has reportedly amplified in recent weeks after he urged the Fed to “feel the markets” before raising interest rates. Powell has not commented publicly on the issue, and sidestepped a question on Friday, saying he’d received no direct communication from the president.
Both Bernanke and Yellen tiptoed around Trump’s feud with Powell, but noted that it was important to ensure the independence of the central bank.
“It has been a very long tradition, that I think began with President Clinton, for presidents not comment on particular Fed decisions,” Yellen said. “I think that helped shore up the independence of the Fed, and public confidence that the Fed was acting in a non-political way, and it’s been said, trying to make its best judgments to pursue its congressional mandate. I think that’s the best kind of arrangement for a president, vis-a-vis the Fed.”