US President Donald Trump has discussed firing US Federal Reserve Chairman Jerome Powell as his frustration with the central bank head intensified following this week’s interest-rate increase and months of stock-market losses, four people familiar with the matter said.
Advisers close to Trump are not convinced that he would move against Powell and are hoping that the president’s latest bout of anger would dissipate over the holidays, the people said on condition of anonymity.
Some of Trump’s advisers have warned him that firing Powell would be a disastrous move.
Yet, Trump has privately talked about firing Powell many times in the past few days, two of the people said.
White House spokespeople declined to comment, as did Fed spokeswoman Michelle Smith.
Trump’s public and private complaints about members of his administration have often been a first step toward their departures — including former US attorney general Jeff Sessions, former US secretary of state Rex Tillerson and outgoing White House chief of staff John Kelly.
It is unclear how much legal authority Trump has to fire Powell.
The Federal Reserve Act says that governors can be “removed for cause by the President.” Since the chairman is also a governor that presumably extends to him or her, but the rules around firing the leader are legally ambiguous, as Peter Conti-Brown of the University of Pennsylvania says in his book on Fed independence.
Such a move would represent an unprecedented challenge to the Fed’s independence.
Although he was nominated by the president, Powell was thought be insulated from Trump’s dissatisfaction by a tradition of respect for the independence of the central bank.
That separation of politics from monetary policy is supposed to instill confidence that Fed officials will do what’s right for the economy over the long term rather than bend to the short-term whims of a politician.
Trump’s frustration with Powell has greatly intensified in the past few days, two of the people said.
Although Trump’s aim is to stop interest rate increases that slow economic growth, such a move could backfire by roiling already turbulent financial markets.
The Fed on Wednesday announced a widely anticipated rate hike and Powell signaled that he would be more cautious about tightening next year, but investors’ concerns over the chairman’s comments led US equities to record their steepest decline for any Federal Open Market Committee announcement day since 2011.
Equities just recorded their worst week since 2011, with the S&P 500 falling 7.1 percent and the NASDAQ index descending into a bear market.
Trump has laid a lot of the blame on the Fed, saying at one point in October that the central bank was “going loco” for raising rates.
On Dec. 11, before the Fed’s latest rate decision, Trump called Powell a “good man,” but added that “he’s trying to do what he thinks is best. I disagree with him I think he’s being too aggressive, far too aggressive, actually far too aggressive.”
The central bank “would be foolish” to proceed with a rate hike, Trump told reporters.
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