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Donald Trump says he discussed firing Fed boss but 'highly unlikely' he will | |
(about 1 hour later) | |
Trump on firing Powell: 'We're not planning on doing anything' | Trump on firing Powell: 'We're not planning on doing anything' |
President Donald Trump has said it is "highly unlikely" he will fire the chair of the US Federal Reserve, hours after asking lawmakers whether he should sack Jerome Powell. | President Donald Trump has said it is "highly unlikely" he will fire the chair of the US Federal Reserve, hours after asking lawmakers whether he should sack Jerome Powell. |
Stock markets and the dollar slipped following reports Trump had broached the idea with Republicans on Tuesday but quickly bounced back after he downplayed the discussions. | Stock markets and the dollar slipped following reports Trump had broached the idea with Republicans on Tuesday but quickly bounced back after he downplayed the discussions. |
Dismissing the chair of the Federal Reserve would be a major break with precedent. | |
Trump has repeatedly called on Powell to lower US interest rates in a series of highly critical outbursts, which continued on Wednesday when the president called him a "knucklehead" and claimed he was "doing a lousy job". | |
The president acknowledged that he had revived discussions about firing Powell - who Trump appointed during his first term - but said he was "not planning on doing anything". | |
Pressed on whether he was ruling out the idea, he said: "It's highly unlikely unless he has to leave for fraud." | Pressed on whether he was ruling out the idea, he said: "It's highly unlikely unless he has to leave for fraud." |
Trump's allies have joined in the attacks against Powell, and last week accused the central bank boss of mismanaging the renovation of Fed properties. | |
Powell's second term as Fed chair ends in May next year. He can stay on as a governor of the central bank until 2028. | Powell's second term as Fed chair ends in May next year. He can stay on as a governor of the central bank until 2028. |
The Federal Reserve was established by Congress and has powers to set policy independent of the White House. | The Federal Reserve was established by Congress and has powers to set policy independent of the White House. |
Powell has denied that the president has the authority to fire him, especially over a policy disagreement, but White House officials have said he can be removed for cause. | Powell has denied that the president has the authority to fire him, especially over a policy disagreement, but White House officials have said he can be removed for cause. |
US Federal Reserve chair Jerome Powell was appointed by Donald Trump in 2017 | |
The White House's increasingly hostile attitude to one of the most important independent institutions in the world is adding a new dimension to a fragile global financial system, which is already reeling from Trump's trade wars. | |
The US economy is slowing and facing stressors from the president's sweeping tariffs which economists have warned could fuel inflation. | |
As head of the Fed, Powell plays a key role helping to determine where the US central bank sets interest rates, a decision with implications for borrowing costs across the economy. | |
The key interest rate is currently hovering around 4.3% which is down from last year. | |
However, the Fed has not reduced it as quickly as other central banks such as the European Central Bank and the Bank of England - something Trump has highlighted. | |
The president is among those arguing that it should be lowered to make it easier to borrow and give the economy a boost. | |
Powell has said the bank, which is charged with keep inflation stable, should proceed cautiously given concerns that tariffs could raise prices. | |
Many economists and investors have warned that political interference in the leadership of the Fed could would risk undermining price stability and investor confidence. | |
Speaking to analysts earlier this week, the head of America's biggest bank warned that the Fed's independence was "absolutely critical". | |
Jamie Dimon, chief executive of JP Morgan Chase, said: "Playing around with the Fed can often have adverse consequences, the absolute opposite of what you might be hoping for." | |
Treasury Secretary Scott Bessent said earlier this week that a "formal process" was under way to identify a replacement for Powell. He described Trump's criticism of Powell as "working the refs" - alluding to efforts to pressure referees in sports games. | |
Trump has floated Bessent as a candidate. Others in the running include Kevin Hassett, who currently leads Trump's National Economic Council, and conservative economist Kevin Warsh. | Trump has floated Bessent as a candidate. Others in the running include Kevin Hassett, who currently leads Trump's National Economic Council, and conservative economist Kevin Warsh. |
Powell was nominated to lead the Fed by Trump in 2017, replacing Barack Obama's appointee Janet Yellen. | Powell was nominated to lead the Fed by Trump in 2017, replacing Barack Obama's appointee Janet Yellen. |
Former President Joe Biden extended his term in 2021. | Former President Joe Biden extended his term in 2021. |