Jerome Powell, Chairman of the Federal Reserve, has said that he would not resign even if President Donald Trump asked. In the past few months, president Trump has repeatedly criticized Powell and the Federal Reserve for continuing with their tightened monetary policy.
He went as far as saying in a Fox Business interview that the Fed is the “biggest threat” to the economy. The President has also asked his advisers if he can have Powell fired.
Trump hired Powell to succeed Janet Yellen in 2017. The move strayed from the norm. Chairmen often serve multiple terms. While the President appoints the Fed Chairman, the Federal Reserve remains an independent agency. The President cannot fire the Chairman over policy disagreements. Doing so can send markets into a tailspin.
Steve Mnuchin Claims President Never Wanted to Fire Powell
Late last month, Treasury Secretary Steve Mnuchin, who was also in support of Powell’s appointment, tweeted that Trump had never had it in mind to fire Powell. Neither does he believe the president had the power to go through with it.
(2/2) especially in light of my major trade negotiations which are ongoing, but I never suggested firing Chairman Jay Powell, nor do I believe I have the right to do so.”
— Steven Mnuchin (@stevenmnuchin1) December 22, 2018
Powell fired back Friday. He said he has no plans to leave his job, even if asked by Donald Trump to do so.
When asked on Friday during a panel at a conference the American Economics Association along with former Federal Reserve chairmen Ben Bernanke and Janet Yellen, he simply replied, “No.”
Powell confirmed that neither Donald Trump nor his aides have contacted him or expressed displeasure. He doesn’t have any plans to meet with Trump. Yet, there are rumors of a planned meeting between the former investment banker and the President. The hope is to alleviate animosity.
However, speaking with moderator Neil Irwin, Powell said:
“Meetings between presidents and Fed chairs do happen, but nothing’s been scheduled.”
Monetary Policy Is Not Political
Ben Bernanke and Janet Yellen highlighted the significance of isolating monetary policy decisions from political influences. To them, it ensures the soundness of these decisions and assures investors. Presidents Richard Nixon and Lyndon Johnson influenced their Fed chairs. More recent presidents have chosen to refrain from commenting on policy decisions.
Yellen said, “Obviously, the president has the right to comment on the Fed. But I would worry that if it continues or intensifies, it could undermine confidence in the Fed.”
Powell also reiterated that the Fed would continue to function without being swayed by any politician’s comments, including those of the President.
The Fed raised interest rates in December, even in the midst of signs that the global economy might be slowing down, it has signaled that it might consider making changes in 2019.
The only problem our economy has is the Fed. They don’t have a feel for the Market, they don’t understand necessary Trade Wars or Strong Dollars or even Democrat Shutdowns over Borders. The Fed is like a powerful golfer who can’t score because he has no touch – he can’t putt!
— Donald J. Trump (@realDonaldTrump) December 24, 2018
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