President Donald Trump denied he is seeking to remove Federal Reserve Chair Jerome Powell, after raising the idea in a closed-door meeting with congressional Republicans that leaked to the media.
“No, we’re not planning on doing anything,” Trump told reporters on Wednesday. He later added, “I don’t rule out anything, but I think it’s highly unlikely, unless he has to leave for fraud.”
A White House official, speaking on the condition of anonymity earlier Wednesday, said they expected Trump to soon move against the Fed chief after his meeting with members of Congress visiting the White House to discuss cryptocurrency legislation. Some lawmakers also left that Tuesday evening meeting with that impression, and Trump acknowledged that he had polled the participants about dismissing Powell.
The president’s remarks in the Oval Office left open the possibility of ousting Powell for cause. Trump and his allies have lambasted the Fed chair over the central bank’s decision to hold interest rates steady and the cost of the central bank’s renovations of its Washington headquarters.
The events marked the latest turn in the long-running saga between Trump and Powell. The president has repeatedly floated the prospect of firing the Fed leader over the bank’s monetary policy, but has stopped short.
Many analysts have warned that if Trump were to follow through on ousting Powell it would roil financial markets and lead to a consequential legal showdown over the independence of the central bank. But the reaction on Wednesday was muted.
On the early news that the president would likely make the move, stocks, the dollar and short-dated yields all declined, but showed no drastic repricing.
“The market did not react that badly before Trump disavowed the reports,” Derek Tang, an economist at LH Meyer/Monetary Policy Analytics in Washington, wrote in a note to clients. “Were it a trial balloon to test the waters, it was a success and might embolden Trump. Now the window of acceptability has shifted, for the worse.”
Trump has blasted Powell for what he says is the bank’s sluggishness on interest-rate cuts. The president has said he wants the bank to slash its benchmark rate, currently in a range of 4.25% to 4.5, by as much as 3 percentage points to lower federal borrowing costs.
The president on Wednesday again attacked Powell as a “knucklehead” who has been “too late” to lower rates. Trump initially nominated Powell to lead the Fed in 2017 and former President Joe Biden appointed him to another term in 2022, which expires next May.
“I was surprised he was appointed. I was surprised, frankly, that Biden put him in and extended him, but they did,” the president said.
Two individuals familiar with the meeting Tuesday night said Trump had displayed a letter authorizing Powell’s firing, but Trump on Wednesday denied that he drafted and displayed such a document. The president did say of the lawmakers in the room that “almost every one of them” supported the idea of removing the central bank chief.
Anna Paulina Luna, a Florida Republican who was among the holdouts on the cryptocurrency bill, wrote on social media that she had heard “Jerome Powell is getting fired! From a very serious source.”
In recent days, Trump and his allies have targeted the Fed headquarters project as a cudgel against Powell, arguing that the work has been plagued by cost overruns and is exorbitantly lavish for a government office building.
Powell has called media reports about the renovations inaccurate. Earlier this week, he made a formal request for the bank’s inspector general to review the renovation.
The dispute could carry legal significance if Trump does decide to move on Powell. Presidents lack the power to remove Fed officials without cause under the law, a provision that was bolstered by a Supreme Court ruling in May on Trump’s authority to oust members of independent government agencies.
Powell has maintained that a president has no legal authority to fire or demote those in leadership positions at the Fed. In April he said, “we’re not removable except for cause.”
Asked Tuesday if the renovation costs amount to a fireable offense, Trump said “I think it sort of is.”
The brouhaha over Powell took place as Trump in recent days sought to tamp down fissures within his Make America Great Again political movement over his administration’s handling of potential files related to the late, disgraced financier Jeffrey Epstein. In the Oval Office on Wednesday, Trump continued to field questions about the matter.
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