President Trump, furious over the Federal Reserve’s latest rate increase amid nosediving markets and slowing economic growth, has discussed with key advisers the possibility of firing Reserve chairman Jerome Powell.
The Federal Open Market Committee voted on Wednesday to raise rates another 0.25 from 2.25 to 2.50. That decision has drawn the ire of President Trump, who has argued that rates should not rise.
President Trump had raised the possibility of firing Powell earlier this year after the last rate increase, but his advisers had expressed doubts that such a move would be within the law. However, Trump has renewed interest in the subject after Powell and the Fed raised rates again this week.
According to CNN, the White House staff is uncertain that the President has the legal authority to fire the Federal Reserve Chairman. The President does have the authority to fire a Federal Reserve governor with cause, but firing the Chairman has never been tested.
However, President Trump’s top economic advisers have reportedly suggested to him that firing Powell would only have the opposite effect that the President desires, as it would create uncertainty among investors, and in turn, likely cause markets to continue their free fall. According to The Hill, President Trump’s advisers are hoping that he will back down from his stance over the Christmas break, though his vacation plans have been delayed due to the impending government shutdown.
Scoop: Trump has talked about firing Jerome Powell, a move that would represent an unprecedented challenge to Federal Reserve’s independence.— Jennifer Jacobs (@JenniferJJacobs) December 22, 2018
Advisers hope latest bout of anger will dissipate over holidays.
Story by me, @SalehaMohsin, @margarettalev.https://t.co/Cc3cLivD3Z
Earlier this month, Chairman Powell publicly pushed back against President Trump regarding the dangers of putting political pressure on the Federal Reserve, which is supposed to operate as an independent institution.
“I know, and everyone who works at the Fed knows, that we’re going to do our jobs the way we’ve always done them,” Powell said.
President Trump is concerned about the growing economic slowdown and often asks his advisers if he will be blamed for plunging markets. His advisers have suggested that he will. According to senior officials, President Trump has been able to weather many political crises due to strong economic and market performance, but anxiety is growing in the White House as that buffer seems to be dissipating.
The market volatility has come after a series of disappointments for the Trump administration that have concerned both his supporters and critics alike. Last month, General Motors elected to close its manufacturing plants in Ohio and Michigan, striking a critical blow to Trump’s campaign promises to return manufacturing jobs to the United States, affecting a voter base that was critical to his election in 2016. President Trump’s escalating trade war with China and the resulting tariffs imposed on Chinese goods have also inspired his critics while hurting his supporters in the agricultural sector.