(AFP) – US President Donald Trump said Wednesday that he was not currently planning to fire Federal Reserve Chair Jerome Powell, but added that he did not rule it out. Trump’s mixed messaging, after months of escalating attacks on the independent central bank chief, sent the yield on the 30-year US Treasury bond surging above five percent.
Asked about whether he would eject Powell, Trump said he is “doing a lousy job but no, I’m not talking about that.” “I don’t rule out anything, but I think it’s highly unlikely,” he added. Trump noted that he would in any case be able to make a change at the top of the Fed when Powell’s term ends next year. “We’ll pick somebody that’s good,” Trump said. “We want to see lower interest rates.”
Powell’s term at the helm of the US central bank does not conclude until May 2026, and his term as a Fed governor is up at a later date. The Fed chair has said that he did not plan to step down early, and considers the central bank’s independence over monetary policy to be a matter of law. A Supreme Court order recently suggested that Fed officials cannot be taken out of their jobs over policy disagreements, meaning they have to be removed “for cause,” which could be interpreted to mean wrongdoing.
The US leader has repeatedly lashed out at Powell for not lowering interest rates more quickly, calling the central banker a “numbskull” and “moron” recently. Late Tuesday, Trump suggested that a $2.5 billion renovation plan at the Fed could be sufficient cause to force Powell out. Asked by a reporter if the spending was a fireable offense, Trump said: “I think it sort of is.”
The US leader on Wednesday floated the possibility of “fraud” involved with the renovation, but provided no details substantiating the allegation. The president has received political backing from his party for firing the Fed chair, US media reported Wednesday, noting that he told a room of Republican lawmakers that he would do so.
A White House official told CNBC: “They expressed approval for firing him. The president indicated he likely will soon.” The New York Times reported that Trump showed off a draft letter to oust Powell at his meeting with about a dozen House Republicans late Tuesday, although the president said Wednesday that he only “talked about the concept” of removing Powell instead.
Trump added Wednesday that many people want the top job at the Fed, saying: “I think it’s one of the easiest jobs in government, you show up once a month and you make a statement about where the economy is going, and we’re going to raise or lower interest rates.”
Financial markets took a hit after reports about Trump’s plans, although they recouped some losses after his later remarks. The dollar initially fell by one percent against the euro before regaining ground, while safe haven asset gold logged gains. Wall Street’s main indexes stumbled, while the yield on the 30-year US bond surged on market worries. The Dow Jones Industrial Average was flat while the broad-based S&P 500 Index and tech-focused Nasdaq both lost 0.1 percent.
– Beiyi SEOW and Danny KEMP
© 2024 AFP
