Trump reiterated on Wednesday that he will not be firing Federal Reserve Chair Jerome Powell, contrary to his previous warning in a private meeting with legislators the previous day.
Despite Trump’s reluctance to order the chair’s dismissal, the administration has been trying to put as much pressure on him as possible, which is why there are conflicting messages.
Reporters in the Oval Office questioned Trump whether he had utterly disregarded the possibility of dismissing Powell. Trump responded by saying, “I never rule anything out, but it was “very improbable.”
An crucial condition, though, was his offering: “Unless he has to leave for fraud.”
The president has been more determined to fire the chair behind closed doors. The chair has been a regular target of the president’s ire, especially for the failure to reduce interest rates quickly enough.
A senior White House insider informed HEADLINESFOREVER that at a meeting with lawmakers on Tuesday, Trump asked them if they thought he should fire Powell. A person informed of the president’s comments during the meeting said that he threatened to dismiss him as early as Wednesday, citing his displeasure with the $2.5 billion restoration plan for the Federal Reserve headquarters.
An eyewitness said he even pointed to what he said was a letter terminating Powell’s employment.
A second source informed us that Trump seemed energized by the reaction he was receiving from the politicians who were pushing for his dismissal of Powell and that he was determined to remove the chair.
Trump told reporters on Wednesday that he had discussed the “concept” of dismissing Powell with Congress, and that the majority of politicians he had spoken with were supportive of the idea. However, he denied the rumors that he intended to dismiss Powell, calling them “not true.”
In an effort to escalate his criticism of the Fed chair, Trump said on Tuesday night that the building restoration plan could be enough to replace Powell.
But according to a number of individuals, it was not evident that any kind of termination was impending. Behind closed doors, Trump has threatened to terminate people, including Powell, on many occasions.
The concept is only being considered at the moment, according to another White House official.
Should Trump decide to remove Powell, it may trigger a chain reaction in global markets, perhaps leading to a decline in the value of the dollar and US Treasuries. Following news of the president’s approach in that direction, the US dollar index, which tracks the value of the dollar relative to six major foreign currencies, fell by as much as 0.8% on Wednesday morning. Midway through the trading day, the dollar index shed some of its losses, trading at a 0.3% loss following Trump’s statements from the Oval Office.
While defending the independence of the Fed, a few Republican senators voiced worry on Wednesday afternoon about the potential impact on the stock market in the event that Trump were to remove Powell from his position.
“The stock market and the bond market will crash if you fire the chairman of the Federal Reserve,” stated John F. Kennedy, a senator from Louisiana.
“At this time, if Powell were to unilaterally reduce interest rates by 300 basis points, or 3%, the bond market would likely react negatively, leading to a spike in interest rates and significant consequences for our ability to borrow money to finance government programs.”
North Carolina Senator Thom Tillis echoed this sentiment, calling Trump’s decision to remove Powell a “colossal mistake” that would “shock wave” the global community over the independence of the central bank.
“So anybody out there in voter land who thinks that firing Jay Powell will change the policy outcomes for dual mandate — I don’t think it will,” he added, referring to the statutory requirement that the Fed both maximize employment and stabilize prices.
Tillis, a member of the Finance and Banking committees, expressed concern that the next event might cause a ripple effect in the markets, leading to consequences that market watchers are not happy about.
According to last week’s HEADLINESFOREVER article, White House advisors have been working together to publicly criticize Powell and implement administrative changes that would give Trump more power.
However, according to insiders, that leverage has not been intended to lead to Powell’s dismissal—at least not at this time. Rather, it has been a component of a larger movement to alter the independence that Powell and the Federal Open Market Committee have insisted upon.
When Trump said on Tuesday night that the building restoration may be grounds to dismiss Powell, he himself increased the pressure.
“In my opinion, he’s awful….” Trump compared his interactions with Powell to “talking to a chair,” telling reporters, “But the one thing, I didn’t see him as a guy that needed a palace to live in.”
“However, I never would have imagined that he would be allocating $2.5 billion to construct a small addition onto the Federal Reserve,” he remarked.
The president said, “I think it sort of is” in response to a reporter’s question about whether or not that constituted a firing offense.
Those in Trump’s inner circle have been discussing for months how to remove Powell from office without firing him.
Russell Vought, the director of the Office of Management and Budget (OMB), stated in a letter that was shared on social media last week that Powell had broken the law by not following federal oversight procedures and by misleading Congress about the nature of the planned restoration.
According to HEADLINESFOREVER, Trump removed three members of the National Capital Planning Commission—the federal government’s regional planning agency—who were supposed to oversee the renovation project. Trump then appointed three loyalists to their positions: Stuart Levenbach, a member of the Office of Management and Budget, James Blair, who was deputy chief of staff, and White House staff secretary Will Scharf.
Bill Pulte, chairman of the Federal Housing Finance Agency, has urged Congress to conduct an investigation against Powell, while Peter Navarro, senior counselor for trade and manufacturing, penned an opinion piece describing Powell as one of the worst Fed chiefs in history.