- President Donald Trump reportedly discussed replacing his handpicked chairman of the Federal Reserve late last year.
- Trump has repeatedly lashed out at the Fed about higher interest rates.
- Trump’s criticism has raised concern about the Fed’s reputation as an institution independent from political influence.
President Donald Trump reportedly discussed replacing his handpicked chairman of the Federal Reserve late last year.
Axios reported Wednesday the president was considering ousting Powell and nominating Kevin Warsh, a former Fed governor and Bush administration aide who was considered for the position in 2017.
Trump has repeatedly lashed out at the Fed about higher interest rates. In December, when the stock market was down, he spoke privately about the possibility of firing Powell.
“The only problem our economy has is the Fed,” Trump tweeted on December 24. “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!”
Those attacks have continued even as the central bank signals interest rates will remain steady for awhile. The Wall Street Journal reported Tuesday that Trump has lambasted Powell at three meetings in the last week alone.
Removing the Fed chairman wouldn’t necessarily have any effect on short-term rates. The target range for the benchmark interest rate is decided by the Federal Open Market Committee, made up of 12 officials, not by Powell alone.
Ken Kuttner, a Williams College economist and former Fed staffer, said Warsh’s views toward monetary policy lean conservative but probably wouldn’t differ much from the existing consensus.
“But the whole idea of replacing a Chair because of policy disagreements — that’s beyond the pale, even if the replacement’s credentials are respectable,” he said.
Trump’s criticism has raised concern about the Fed’s reputation as an institution independent from political influence. While past presidents have been critical of the Fed from time to time, there’s little precedent for the degree of Trump’s attacks on monetary policy.
“The president has shown, repeatedly, that he has no respect for the Federal Reserve’s independence and I am not surprised he would threaten to fire the chair, which experts say he does not have the authority to do,” said Austan Goolsbee, who chaired the Council of Economic Advisers under former President Barack Obama.