US President-elect Donald Trump said in an interview aired yesterday he will not try to replace Federal Reserve Chair Jerome Powell upon taking office in January.
“No, I don’t think so. I don’t see it,” Trump said on NBC News’ Meet the Press with Kristen Welker when asked if he would seek to remove Powell, whose term ends in 2026.
Trump added that he didn’t think Powell, who he has sparred with in the past over interest rate levels, would go quietly.
“I think if I told him to, he would. But if I asked him to, he probably wouldn’t,” Trump told Welker.
Trump campaigned on a promise to lower mortgage rates and other borrowing costs for US households, raising the prospect that he could clash with Powell – as he did in his first term – over interest rate policy. Trump’s vow to implement across-the-board tariffs could also complicate the Fed’s efforts to keep inflation in check.
Last month, Powell said he would refuse to leave office early if Trump tried to remove him, arguing that removing him, or any of the other Fed governors, ahead of the end of their terms is “not permitted under the law.”
Trump named Powell, a former private equity executive and a Republican, to Fed chair in early 2018 to replace Janet Yellen, who later became President Joe Biden’s Treasury Secretary. Biden reappointed Powell to his current term.
But the relationship between Trump and Powell turned sour, with Trump frequently attacking the Fed and its chief during his first term in office. Trump privately discussed trying to dismiss Powell in late 2018, upset over the Fed’s move to raise interest rates, and publicly argued against rate hikes.
Trump also criticised Powell in early 2020 at the start of the Covid-19 pandemic, saying Powell had made several bad decisions and arguing he had a right to remove him.
Trump’s attacks on the Fed during his first term broke from decades of presidents steering clear of direct criticism of the central bank, which operates with legal independence subject to the oversight of Congress. Earlier this year, Trump said he felt he should have a say in the Fed’s decisions, an indication of his interest in infringing on its independence.
Traders are expecting the Fed to cut interest rates at its upcoming December 17-18 policy meeting, after recent data showed the US labour market was continuing to cool. A quarter-percentage-point reduction would bring the Fed’s policy rate to the 4.25-4.50 per cent range, a full percentage point below where it was in September when the central bank began its easing cycle.
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