Federal Reserve Chairman Jerome Powell said Thursday he would refuse to leave office early if incoming President Donald Trump tried to remove him, saying he could not be removed legally in any way.
Speaking at a news conference after the latest meeting of the rate-setting Federal Open Market Committee, Powell was asked whether he would step down from central bank leadership if asked by Trump, who ousted him in his first term as president. Was attacked again and again. Powell clearly said “no” and said removing him or any other Fed governor before the end of their term “is not permitted under law.”
Powell said this after the Fed met expectations and cut its interest rate target range by a quarter percentage point to between 4.5 percent and 4.75 percent, as officials continued to ease monetary policy amid easing inflation pressures. Are.
Ahead of the US national elections on Tuesday, the Fed was widely expected to push for interest rate cuts.
Powell shrugged off several questions on Thursday about what Trump’s announced policy might mean for the central bank’s decision-making. “The election will have no impact on our policy decisions in the near term,” Powell said. “We don’t speculate, we don’t speculate and we don’t assume what the broader government might do,” he said.
Earlier on Thursday, CNN reported that a Trump adviser said the president-elect would keep Powell in office until the end of his leadership term, which is set to end in May 2026. Powell’s term as governor is until the end of January, 2028.
CNN reported that Trump is considering former Fed governor Kevin Wersh, now a frequent critic of the central bank, and Kevin Hassett, his former administration’s chief economist, as potential Powell replacements.
Fed leadership roles are designed by law to protect them from political pressure and removal outside their formal terms.
sourness in relationship
Trump nominated Powell as Fed chair in early 2018 to replace Janet Yellen, who later became President Joe Biden’s Treasury secretary. Biden reappointed Powell to her current term.
But the relationship between Trump and Powell soured, with Trump frequently attacking the Fed and its chief during his first term in office for the central bank’s policy choices, though policymakers routinely ignored harsh words. . Trump’s Fed attacks mark decades of presidents shying away from direct criticism of the central bank, which operates with legal independence subject to congressional oversight.
Any attempt to oust the Fed leader, even if unsuccessful, would be received very negatively by financial markets and would also fuel fears of rising price pressures.
At the same time, Trump says the policies he favors — higher and broader trade tariffs and mass deportations of undocumented immigrants — are likely to reignite the inflationary fires that the central bank has been successful in cooling. Has been found.
If Trump’s policies create that reality, it could prevent the Fed from cutting rates as far as expected, and could even force the central bank to raise rates. To some observers, this suggests the Fed and Trump may be on a collision course.
But right now, the Fed has some breathing room. “President-elect Trump is likely to pressure the Fed to cut interest rates more aggressively as he did during his first term, but at least it has little say on the trajectory of interest rates over the next year. The impact will be because the Fed system is structured to “protect rate decisions from pressure from the White House,” said Bill Adams, chief economist at Comerica Bank.