Fed chief says he will resist if Trump tries to have him fired

Federal Reserve chairman Jerome Powell testifying during a House Financial Services Committee hearing in Washington on Wednesday. Lawmakers from both parties are becoming more vocal in their defence of Fed independence, which President Donald Trump h
Federal Reserve chairman Jerome Powell testifying during a House Financial Services Committee hearing in Washington on Wednesday. Lawmakers from both parties are becoming more vocal in their defence of Fed independence, which President Donald Trump has tried to call into question.PHOTO: REUTERS

WASHINGTON • Federal Reserve independence moved front and centre in Congress as chairman Jerome Powell said he would not stand down if US President Donald Trump tried to fire him.

House Financial Services Committee chairman Maxine Waters opened a semi-annual hearing on monetary policy by saying that central bank independence was the "elephant in the room". She added: "It is essential that the Federal Reserve maintains its independence from the executive branch."

Ms Waters, a California Democrat, asked Mr Powell directly: "If you got a call from the President today or tomorrow, and he said, 'I am firing you, pack up, it's time to go'. What would you do?"

Mr Powell said, in one of his strongest rebuffs before lawmakers of the notion: "Of course, I would not do that."

"I can't hear you," Ms Waters joked, causing laughter throughout the room. "My answer would be no," Mr Powell reiterated.

The exchange comes amid unprecedented attacks and attempted influence on monetary policy by Mr Trump, who has criticised both Mr Powell and the central bank's policy decisions.

In his answer to lawmakers on Wednesday, Mr Powell strongly reasserted the Fed's independence. That was something the President has tried to call into question, even though Congress has authority for oversight of the central bank.

 
 
 

Mr Trump discussed firing Mr Powell late last year and asked White House lawyers earlier this year to explore options for removing him as Fed chairman, Bloomberg has reported.

Last month, Mr Trump denied in an interview that he had threatened to demote Mr Powell back to a board governor but said he would "be able to do that if I wanted".

The President has also tried to appoint several loyalists to the Fed's board of governors. Two past picks were panned by Congressional members and failed to advance. Last week, Mr Trump said he will appoint Ms Judy Shelton to the board of governors.

Ms Shelton, after the announcement, said "this president really gets it" and that she "will strive to support the US pro-growth economic agenda with the appropriate monetary policy".

Mr Trump also named St Louis Fed research director Christopher Waller for one of the two open seats on the board. Mr Waller works for St Louis Fed president James Bullard, who dissented at the June meeting in favour of a quarter-point rate cut.

Ms Waters' comments were followed by Mr Patrick McHenry, the ranking Republican on the committee from North Carolina, who asked the Fed chairman if policy was "impeded" by people saying positive or negative things about the central bank. Mr Powell said it was not.

Lawmakers from both parties are becoming more vocal in their defence of Fed independence. Mr Powell embraced the central bank's independence in his opening testimony, noting that it comes with a need for transparency and accountability.

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A version of this article appeared in the print edition of The Straits Times on July 12, 2019, with the headline 'Fed chief says he will resist if Trump tries to have him fired'. Print Edition | Subscribe