Trump said he was taking over the Fed only weeks ago, but he has no intentions to fire Powell.
President-elect Donald Trump has denied dismissing Jerome Powell as Federal Reserve Chair. These rumors stem from his campaign promise to run the central bank and economy.
However, in a recent interview with NBC’s Meet the Press, Trump stated, “Should I fire him? Not seeing it.” Days after Trump’s election, the Fed chair told reporters he wouldn’t resign and that the president can’t dismiss him or other top Fed executives.
Trump has long had contentious Fed views. He really thinks the president should control monetary policy. In an October Bloomberg interview, Trump stated, “I believe I have the right to say, ‘I think you should go up or down a little bit.’” Maybe I shouldn’t order it, but I should remark.”
He continued. Trump mocked Powell as having “the finest position in government.” He said, “You come into the office once a month, and you say, ‘Let’s see, flip a coin.’”
Trump is furious with Powell because the Federal Reserve raised interest rates during his first term, slowing economic growth.
Trump pondered removing Powell in 2018, but he didn’t. Legal academics noted that dismissing a Federal Reserve Chair requires more than an order.
Only substantial misbehavior or misuse of authority may remove board members under the Federal Reserve Act, not policy disputes. “Looks like I’m stuck with you,” Trump said from the Oval one night by phone.
Powell says he doesn’t expect fresh problems with Trump’s government despite their prior conflicts. Powell’s term as Chair ends in 2026, while his 14-year term as Federal Reserve Governor ends in 2028, giving Trump little space to replace him.
The US president appoints Board of Governors members. This involves choosing Chair and Vice-Chair. Governors and chairs serve 14- and 4-year terms.
All of them are on the FOMC, which sets interest rates. Trump will have at least two Fed Board appointments in his next term. One opportunity will occur in January 2026 when Fed Governor Adriana Kugler’s tenure finishes.
These choices would need Senate approval, but with a Republican majority, Trump is expected to meet less opposition than during his previous administration, when numerous Fed candidates were denied.
Despite these appointments, Trump has little power. Twelve regional bank presidents are appointed by their boards and approved by the Federal Reserve Board to drive Fed policy. This decentralized arrangement limits the president’s monetary policy influence.
He’s hardly the first president to attempt to influence the Fed, but his style is more apparent. He lambasts Powell in news conferences and interviews for weak policy judgments.
He said the Fed has “sort of gotten it wrong a lot.” Trump says Powell has made important judgments “a little bit too early and a little bit too late.”
Powell thinks the central bank must manage inflation and employment without political meddling to retain investor and public respect. Powell stated earlier this year, “Without a doubt, the Fed must remain apolitical.”
However, reality is more difficult. The Federal Reserve works with the Treasury Department to assess the economic effects of government actions, including tax cuts and expenditures.
Critics say this relationship prevents the Fed from being apolitical. Wharton School Fed historian Peter Conti-Brown calls the Fed a “deeply political institution.”
He emphasizes that the Fed’s choices typically include several groups, distinguishing politics from partisanship.
Despite these hurdles, the Fed has been independent for almost a century. This concept allows central banks worldwide to raise interest rates to combat inflation without political repercussions.
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