WASHINGTON: US President Donald Trump and his administration are studying whether dismissing independent Federal Reserve chief Jerome Powell is an option, his top White House economic aide said on Friday (Apr 18).
“The president and his team will continue to study that matter,” National Economic Council director Kevin Hassett told reporters when asked if firing Powell was a possibility, one day after Trump lashed out at him.
The US president does not have direct authority to fire Federal Reserve governors, but Trump could initiate a lengthy process to attempt to unseat Powell by proving there was “cause” to do so.
Hassett’s exchange with the press came after Trump ramped up a long-simmering feud with the Fed chair, accusing Powell of “playing politics” by not cutting interest rates and asserting he had the power to evict Powell from his job “real fast”.
Powell had warned that Trump’s sweeping tariffs would likely push up prices and constrain economic growth, and could put the Fed in the unenviable position of having to choose between tackling inflation and unemployment.
On Thursday, the Republican president insisted that he could force Powell out.
“I’m not happy with him. I let him know it and if I want him out, he’ll be out of there real fast, believe me,” Trump said.
Trump has frequently criticised the Fed chairman, whom he originally nominated during his first term.
It pushes into an issue with the potential to rock global markets if the president tries to fire Powell because he disagrees about his monetary policy decisions.
International Monetary Fund Managing Director Kristalina Georgieva said this week that with the global outlook weakening in the face of the Trump tariff onslaught, central banks like the Fed needed to remain agile and credible – capacities that can be limited by political interference.
“A sudden crystallisation of the threat to Fed independence would both intensify market stress and shift it in more of a stagflationary direction with a sharp increase in tail risk,” Evercore ISI Vice Chair Krishna Guha said in a note.