Trump ‘did not threaten to demote Powell’

BloombergWASHINGTON (Bloomberg) — U.S. President Donald Trump denied that he’d threatened to demote Federal Reserve Chairman Jerome Powell but said he’d “be able to do that if I wanted.”

The president repeated his criticism of Powell’s actions as Fed chief in an interview with NBC’s “Meet the Press,” conducted Friday and broadcast on Sunday.

“I’m not happy with his actions,” Trump said of Powell. “No, I don’t think he’s done a good job.”

Trump has spent months criticizing Powell, 66, whom he chose to replace Janet Yellen as Fed chair in 2018, for raising interest rates, in his view, too far and too fast.

“I didn’t ever threaten to demote him,” Trump told NBC. “I have the right to do that. But I haven’t said that.”

Trump told confidants as recently as Wednesday that he believes he has the authority to replace Powell as Fed chairman, demoting him to the level of board governor, according to people familiar with the matter. Powell said on Wednesday that he intends to serve his full four-year term and that “the law is clear” on that issue.

Trump said the U.S. economy is strong enough to “bull through” what he sees as the headwinds created by the Fed’s four interest rate hikes in 2018, “but I’m not happy with” Powell’s actions.

“I had somebody that raised the rates very rapidly. Too much. He made a mistake. That’s been proven,” Trump said. By contrast, Trump said his predecessor, President Barack Obama, “had somebody” — Yellen — “that kept rates very low.”

“Obama was playing with funny money,” Trump said. “I’m playing with the real stuff.”

Trump’s strident attacks on the Fed in interviews and on Twitter are a departure from almost three decades of caution in the White House about making public comments on monetary policy, out of respect for the independence of the central bank.

The Federal Reserve Act provides explicit protection for Fed governors against removal by the president except “for cause.” Courts have interpreted the phrase to require proof of some form of legal misconduct or neglect of basic duties. A disagreement over monetary policy wouldn’t meet that bar.

It’s less clear, however, whether the president can demote a chair, removing him or her from the top position while leaving the person as a Fed governor.Speech

Click to play


+ -

Generating speech. Please wait...

Become a Premium Member to use this service.

Become a Premium Member to use this service.

Offline error: please try again.