The White House has confirmed that officials are looking into whether President Donald Trump can fire Federal Reserve Chair Jerome Powell.
It comes as the administration accuses the central bank leader of “playing politics” with monetary policy.
Speaking to reporters at the White House, Trump’s economic adviser Kevin Hassett said:
“The president and his team will continue to study that matter.”
Trump is frustrated with Powell’s reluctance to lower interest rates even as inflation has fallen from its Biden-era peaks.
Inflation fell to 2.4% in March, which is just above the Fed’s 2% target.
The Fed hiked interest rates during the Biden presidency to combat historic inflation that surged to 9.1%.
While the Fed started lowering rates last year, Powell is cautious about adjusting them again because of the uncertain impact of Trump’s tariffs.
Raising interest rates discourages borrowing and spending, which eases pressure on inflation.
At the same time, leaving rates raised for too long can slow down the economy.
Trump fired off a broadside on social media criticizing Powell’s timing as “Too Late.”
The president also points to the European Central Bank’s recent decision to cut rates again.
“Too Late should have lowered Interest Rates, like the ECB, long ago, but he should certainly lower them now,” Trump wrote.
“Powell’s termination cannot come fast enough!”
The president’s message followed an ominous prediction from Powell about Trump’s tariffs.
The central bank leader said an economic slowdown could occur simultaneously with increased inflation.
That would force the Fed to strike a difficult balance between combating inflation, which entails raising rates, and stimulating growth by slashing them.
Speaking to an audience at the Economic Club of Chicago, Powell said:
“The level of the tariff increases announced so far is significantly larger than anticipated.
“The same is likely to be true of the economic effects, which will include higher inflation and slower growth.”
Meanwhile, Trump’s critics have accused him of threatening the Fed’s conventional political independence.
Powell has insisted he’s not going anywhere.
“Our independence is a matter of law,” Powell said Wednesday.
“We’re not removable except for cause.
“We serve very long terms, seemingly endless terms.
“So we’re protected by law.
“Congress could change that law, but I don’t think there’s any danger of that.
“Fed independence has pretty broad support across both political parties and on both sides of the Hill.”
Meanwhile, Trump accused Powell of “playing politics” while answering questions from reporters on Thursday.
“If I want him out, he’ll be out of there real fast, believe me,” Trump said in the Oval Office.
“I’m not happy with him.”
