Trump threatens swift removal of Fed chair Powell over rates
President Donald Trump stated on Thursday that if he wants to, Federal Reserve Chairman Jerome Powell will leave his position "real fast." He once again criticised the head of the central bank, claiming that he "really owes it to the American people to get interest rates down."
What do you need to know?
- During a meeting with Italian Prime Minister Giorgia Meloni, Donald Trump suggested that he could swiftly remove Jerome Powell from the position of Fed chairman.
- The US President criticises Powell for the lack of interest rate cuts, which he believes puts the United States at a disadvantage compared to Europe.
- Legal controversies regarding the ability to remove the Fed chairman may soon be resolved by the Supreme Court.
Can Trump remove Powell?
During a meeting with Italian Prime Minister Giorgia Meloni, Donald Trump once again expressed his dissatisfaction with Jerome Powell's actions, the Chairman of the Federal Reserve. The President of the USA stated that he has the right to remove him if he deems it necessary.
"If I want him out he’ll be out of there, real fast, believe me. He’ll leave if I ask him to. He’ll be out of there," Trump said.
He criticised Powell again, claiming that he is not doing a good job, is not pleased with him, and assessed that "he's always too late" with lowering interest rates. He stated that the Fed chief puts the USA in a worse position compared to Europe because the European Central Bank is consistently lowering its rates, while Powell has held back since December. He also assessed that Powell "owes it to the American people" to do so.
Trump's criticism was in response to a Wednesday speech by the Fed chairman in Chicago, in which he assessed that the tariffs imposed by Trump might contribute to increased inflation - possibly even for longer - and lower economic growth. He also suggested that due to uncertainty about trade policy, the Federal Reserve would refrain from further cutting rates.
What are the legal controversies surrounding the removal of the Fed chairman?
Despite Trump's claims that he can freely dismiss the central bank's chairman, this issue is a matter of legal controversy. The Federal Reserve Act references the independence of this institution and that its chairman can only be removed for cause.
Most lawyers believe that such a reason is not related to policy disputes. The Supreme Court may soon weigh in on this issue in connection with another case concerning other independent government agencies.
What could be the consequences of removing Powell?
According to Politico, Treasury Secretary Scott Bessent warned Trump against dismissing Powell - a Republican whom Trump originally appointed - arguing that his removal would further destabilise markets, which are already uncertain due to Donald Trump's announcement of tariffs.
