WASHINGTON (AP) – President Donald Trump said on Saturday that he had the power to fire or degrade Federal Reserve President Jerome Powell, adding new fuel to his longtime animus to the central bank leader at a time when the economy he was at risk of tripping over recession.
Trump told reporters he wasn’t planning on firing Powell, but reiterated his frustration with the president. The comments were particularly surprising because they came when the coronavirus pandemic shook the global economy.
The Dow Jones Industrial Average has had its worst week since October 2008. In a few weeks, U.S. equities have lost all of the gains made in 2019.
“I have the right to do so or the right to remove him as president,” Trump said on Saturday in a press conference called to provide an update on the administration’s response to the coronavirus outbreak. “He has made many bad decisions so far, in my opinion.”
No Fed president has ever been removed by a president. The law establishing the Fed states that its officials and those of other independent agencies can be “removed for cause” by a president. Although this issue was never raised against a Fed official, courts decades ago ruled that “out of cause” meant more than political disagreement.
Powell announced a half-point interest rate cut earlier this month that reduced the Fed’s key rate to a range of 1% to 1.25%. It marked the first time that the central bank cut rates between meetings scheduled since the 2008 financial crisis. And it’s the quickest cut the Fed has made since then.
However, the president continued to complain that “he is not happy with the Fed” because he “followed” and “we should be in charge”. The president stressed that the lower interest rates set by central banks in Japan and Germany are proof that Powell has not been aggressive enough in supporting the U.S. economy. Economists, however, say that lower rates reflect weaker economic prospects than the US economy.
Trump said he didn’t make any decisions, but suggested that he could simply remove him as president. Powell’s four-year term ends in February 2022 and his term as a member of the board of directors expires on January 2028.
“I have the right to take him too and put him in a regular position and hire someone else. And I haven’t made any decisions about it, “said the president.