Trump says he is not planning to fire US Fed chief Powell
Sign up now: Get ST's newsletters delivered to your inbox
A Bloomberg report earlier on July 16 that President Donald Trump was likely to fire Fed chair Jerome Powell (foreground) sparked a drop in stocks and the US dollar, and a rise in Treasury yields.
PHOTO: REUTERS
Follow topic:
- Trump criticised Fed Chair Powell but said firing him is "highly unlikely" unless fraud is proven amid renovation cost overruns.
- Senator Tillis defended the Fed's independence, warning that firing Powell would undermine US credibility and destabilise markets.
- Powell intends to serve his term until 2026 and the White House is considering potential successors, including Bessent and Hassett.
AI generated
WASHINGTON – US President Donald Trump said July 16 he was not planning to fire Federal Reserve chair Jerome Powell, even as he unleashed a fresh round of criticism against the central bank chief and declined to completely reject the possibility of ousting him.
A Bloomberg report earlier on July 16 that the President was likely to fire Mr Powell soon sparked a drop in stocks and the US dollar, and a rise in Treasury yields.
Mr Trump said the report was not true.
“I don’t rule out anything, but I think it’s highly unlikely unless he has to leave for fraud,” Mr Trump said, a reference to recent White House and Republican lawmaker criticism of cost overruns in the US$2.5 billion (S$3.2 billion) renovation of the Fed’s historic headquarters in Washington.
There has been no indication of fraud, and the Fed has pushed back on that criticism.
Stocks pared losses and Treasury yields pared declines after Mr Trump’s fresh comments, which also included a now familiar complaint that Mr Powell should have already cut interest rates and is a “terrible” chairman.
Mr Trump also said he did talk with some Republican lawmakers about firing Mr Powell.
The New York Times reported that Mr Trump showed off a draft of a letter firing Mr Powell during a meeting with roughly a dozen House Republicans on July 15, polling them as to whether he should do it and indicating that he likely would, citing two people briefed on the meeting.
As Mr Trump downplayed the possibility, though, Republican Senator Thom Tillis used his time on the floor of the Senate to deliver a spirited defence of an independent Fed, which economists say is the linchpin of US financial and price stability.
“There has been some talk about potentially firing the Fed chair,” said Mr Tillis, a member of the Senate Banking Committee that oversees the Fed and confirms presidential nominations to its board. Subjecting the Fed to direct presidential control would be a “huge mistake”, he said.
“The consequences of firing a Fed chair, just because political people don’t agree with that economic decision, will be to undermine the credibility of the United States going forward and I would argue, if it happens, you are going to see a pretty immediate response, and we’ve got to avoid that,” Mr Tillis said.
Asked if it would be a problem for Mr Trump to fire Mr Powell, Senate Majority Leader John Thune told reporters: “My understanding is he doesn’t have any intention of doing that.”
House Financial Services Committee chair French Hill told CNBC earlier on July 16 that “President Trump’s own analysis and that of his Treasury Secretary is that he cannot fire (Jerome) Powell”.
Mr Powell, who was nominated by Mr Trump in late 2017 to lead the Fed and then nominated for a second term by Democratic president Joe Biden four years later, has repeatedly said he intends to serve out his term that goes till May 15, 2026.
A recent Supreme Court opinion has solidified a longstanding interpretation of the law that the Fed chair cannot be fired over policy differences but only “for cause”.
Last week, the White House appeared to try to lay the groundwork for that
Mr Powell responded by asking the US central bank’s inspector-general to review the project, and the central bank posted a “frequently asked questions” fact sheet, which rebutted some of Mr Vought’s assertions about VIP dining rooms and lifts that he said added to the costs.
The Fed’s decision to keep its policy rate in the 4.25 per cent to 4.5 per cent range, while it assesses the impact of the Trump administration’s tariffs on inflation, has drawn Mr Trump’s increasing ire.
The “formal process” for identifying a successor to Mr Powell is under way, Treasury Secretary Scott Bessent has said.
Mr Bessent is one candidate for the job, along with White House economic adviser Kevin Hassett, former Fed governor Kevin Warsh and current Fed governor Christopher Waller. REUTERS
