President Donald Trump has stated he is “highly unlikely” to dismiss Federal Reserve Chair Jerome Powell, despite having considered the idea in recent discussions. This stunning news broke during an Oval Office meeting with Salman bin Hamad Al Khalifa, the crown prince of Bahrain. Trump’s comments speak to the heightening animosity between him and Powell. Though Trump has been pressuring the Federal Reserve to lower interest rates for months, Powell has ignored those requests.
Behind the scenes, this week provided ample evidence Trump was entirely focused on getting House Republicans alone to succumb to his support. Most strikingly, he admitted that he’s been wanting to fire Powell for a long time. What these conversations did reveal was a deep-seated anger towards the Federal Reserve’s monetary policy and especially its role in stifling economic growth.
Ongoing Frustrations with Powell
Trump’s dissatisfaction with Powell stems primarily from the Fed’s refusal to lower interest rates, which he believes is necessary for stimulating economic activity. For months now, Trump has railed against Powell on Twitter. He suggests that the Fed’s ultra-easy policies have significantly hindered economic recovery.
At a private meeting with Republican lawmakers, Trump brandished a letter. He claimed that the letter would provide grounds to fire Powell. Later, they learned that the letter found in the hallway was just a prop. Trump hadn’t actually even created that himself; it had been drafted by somebody else. This move further illustrates the dangers and annoyance of the stop-start dynamic characterizing the connection between the President and the independent central bank.
“Almost every one of them said I should” – Donald Trump
Trump’s frustrations are echoed by some members of Congress who have expressed concern about Powell’s leadership at the Fed. White House officials have blasted Powell for pursuing the $2.5 billion makeover of Fed headquarters. Yet, the pendulum has not swung far enough to require an inspector general’s study of this sordid affair.
Support for Powell’s Performance
Despite Trump’s criticisms, several lawmakers have defended Powell’s record as chair of the Federal Reserve. Senator Thom Tillis (R-N.C.) expressed concern that the changes would make the Fed into a body that would be susceptible to the whims of presidential power.
“If anybody thinks it would be a good idea for the Fed to become another agency in the government subject to the president, they’re making a huge mistake” – Sen. Thom Tillis
US Senator John Kennedy (R-La.) realized that Powell has not been perfect in his position. He stressed that Powell has done a pretty good job doing his job.
“I don’t think he’s been perfect,” “I do believe that the chairman is calling them like he sees them” – Sen. John Kennedy
This ironic blend of praise and venom further encapsulates the varied views on Capitol Hill about whether Powell is doing a good job or not.
Future Implications
As debates over Powell’s status play out, so too does speculation over what Trump could do next. Power to dismiss Powell now would be a major political and economic explosion. As some lawmakers have already cautioned, such a move would certainly send shockwaves through financial markets and further erode the independence of the Fed.
