Powell told the CBS News program “60 Minutes” in March that he didn’t think it was appropriate to comment on Trump. But Powell also said he doesn’t think the president has the authority to fire him. “The law is clear that I have a four-year term. And I fully intend to serve it,” he said.
Even if he could demote Powell, Trump can’t choose the chair of the Fed’s rate-setting panel, the Federal Open Market Committee. By tradition, committee members select the Fed chair as their chairman, but they are free to choose anyone on the panel. In the absence of a chair, the committee’s vice chair -- traditionally the president of the New York Fed -- would run the meetings.
Currently, five of the Fed’s seven seats are filled, and Trump is weighing candidates for the other two seats. Trump has named four people since last year for those two seats, none of whom made it through Senate confirmation.
By voicing his frustrations with the Fed, Trump breaks with at least two decades of tradition of presidents refraining from publicly commenting on monetary policy. Presidents, however, have reportedly applied pressure on rates.
Former Fed Chairman Paul Volcker recounted in a recent memoir that in 1984, President Ronald Reagan ordered him not to raise rates before elections. Former President George H.W. Bush urged Alan Greenspan to lower interest rates in a June 1992 interview with the New York Times.
Trump on Tuesday took his pressure campaign against central bankers to the European Central Bank. The president accused the euro area and China of weakening their currencies to gain an economic advantage, calling out ECB President Mario Draghi for pledging monetary stimulus just before the Fed meeting this week.
Draghi said at the institution’s annual forum in Sintra, Portugal, that “additional stimulus will be required” if the economic outlook for the 19-nation euro area doesn’t improve.
This story provided by Bloomberg News.