Trump irritated by Powell's decision, but does he have the authority to remove him as Chairman of the Fed?
- 4 months ago
The latest move by the Fed has left Donald Trump not feeling very pleased, he did after all in previous weeks pointed to the Federal Reserve Bank to await and watch the markets and that he also thought raising rates would have been a huge mistake.
And Jerome Powell should be feeling the heat right now, as according to the latest reports from the White House, his job as Chairman of the Fed may have its days numbered.
The markets have suffered of late, all major indices in the U.S. have all traded negative and have erased all gains made for the year, not to mention that the Dow and S&P 500 have had their worst December month since 1930.
Nevertheless, Trump firing Powell would be a first in American history as no other President has taken those steps previously and could have reverse effect on the already fragile economy and to no surprise Trump’s aides have advised him against that very thought.
It is also not clear as to whether the President has the authority to remove Powell.
Morgan Stanley’s chief U.S. economist, Ellen Zentner shed some light on that particular issue, "The President can nominate a chair but once the chair is confirmed, the president is out of it and the only way you can remove a chair from office is literally if they broke the law. Congress will have to find a cause to remove them from office through a vote and a procedure."
According to the Fed’s own website the authority which it responds to derives from Congress, whom created the Federal Reserve Act in 1913.
Adding his thoughts to Trump’s intentions, former Dallas Fed President Chairman Richard Fisher said, “One of the hallmarks of our great American economy is preserving the independence of the Federal Reserve. No president should interfere with the workings of the Fed."
"Were I Chairman Powell, I would ignore the president and do my job and I am confident he will do just that."
With that being said, Trump is aware the Fed is likely to be less aggressive in 2019 therefore there may still be some time saving Powell’s tenure as Chair of the Federal Reserve, albeit a further decline in the stock markets may very well raise questions on his decisions.
Source: Smart Trend Team