US President Donald Trump said he could force out US Federal Reserve Chair Jerome Powell, rebuking the notion that the US central bank is independent, and vented frustration that monetary policymakers had not recently cut interest rates.
“If I ask him to, he’ll be out of there,” Trump told reporters in the Oval Office Thursday when asked about an earlier social media post blasting the Fed chair as being too slow to lower rates. “I’m not happy with him. I let him know it.”
The US president in the post said that “Powell’s termination cannot come fast enough!”
Photo: AP
At the White House, Trump did not respond to a follow-up question from a reporter about whether he was trying to remove the central bank chief.
Powell, who he nominated to take the Fed’s helm during his first term, has been “terrible,” he said, adding that there is “essentially no inflation,” and if the Fed cut its benchmark, borrowing costs would be lower too.
“Other than interest rates, everything’s down,” Trump said, citing items including crude oil and gasoline.
“Because we’ve got a Federal Reserve chairman who’s playing politics,” he said, noting that European rates by contrast have gone down.
There was little sign of a direct reaction to Trump’s remarks on Powell in financial markets on Thursday. Stocks climbed amid optimism about the potential for tariff deals with the EU and Japan, and Treasuries retreated. The S&P 500 Index closed 0.2 percent higher, while two-year yields were up about 3 basis points, at 3.80 percent in late trading.
Powell’s term as Fed chair runs into May next year, while his term as a governor lasts until February 2028. Trump’s comments come a day after Powell, speaking in Chicago, reiterated that the Fed is not in a rush to cut rates and instead is awaiting greater clarity on the economy.
Nathan Sheets, global chief economist at Citigroup Inc, warned of the danger “if we now cross the Rubicon on central bank independence,” on top of adopting steep tariffs and other policies previously considered unusual for the US.
“The market volatility that we’ve seen over the past month or so would merely be the first course to a much, much longer and more challenging kind of downturn,” Sheets said on Bloomberg Television.
The risk is “we start seriously and permanently undermining confidence in the economy and the markets,” he said.
Democratic US Senator Elizabeth Warren said in a Thursday interview that “the president has free speech just like everyone else, but he does not have the power to fire Jerome Powell. And if he tries, he will crash the markets.”
“Even countries with dictators try to create a central bank that is independent of the president of the country in order to attract capital,” Warren said.
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