Trump has expressed skepticism of other central bankers as well. Earlier Tuesday, he criticized European Central Bank President Mario Draghi for signaling a rate cut and pushing down the value of the euro. He told reporters that he wants a “level playing field” from the Fed.
Bloomberg News reported in December that Trump discussed firing Powell out of frustration over the central bank’s interest rate increases. Earlier this year, Trump asked White House lawyers to explore his options for removing Powell as chairman, according to people familiar with the matter.
Trump’s team conducted the legal analysis and concluded that it would be highly questionable to fire Powell without cause but that a case could be made for replacing him with a sitting Fed governor, the people said, requesting anonymity to discuss internal deliberations. Those findings remain closely held within the White House.
While Trump still regularly expresses his displeasure with the Fed in tweets, talk of removing Powell has subsided. Trump told Powell in a March phone call, “I guess I’m stuck with you,” according to the Wall Street Journal.
The Federal Reserve Act provides explicit protection for all 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.
But if Trump tries to remove him, Powell may be unwilling to challenge him in courts out of concern about damage to the institution and possibly to financial markets, said Mark Spindel, chief investment officer at Potomac River Capital.
“In doing that calculus, I think Jay would run to ground and decide it’s just not worth the fight,” he said.
--With assistance from Austin Weinstein and Laura Litvan.
This article was provided by Bloomberg News.