President-elect Donald Trump sent mixed signals for years about whether he would try to fire or demote the Fed chairman, Jerome Powell when he returns to the Oval Office next year. But the central bank chairman himself made it clear that he is not going anywhere, even if Trump tried.
“Not allowed under the law” the central bank chairman said Thursday, in brief but clear responses to reporters when asked about his views on any legal authority Trump might have to fire or demote him or other top Fed officials. .
“No“he responded at another point in a press conference, about whether he would leave his position. This could become a point of conflict in the coming months. Trump has hinted that he may not be inclined to fire Powell, but he has also maintained that has that power.
For his part, Trump reiterated the idea of firing Powell at a press conference in 2020, when he directly stated: “TI have the right to remove PowellHe added that he could also demote Powell from his position as chairman and “put him in a regular position, and put someone else in charge.” However, it is an unresolved legal issue, and many experts lean on Powell’s side. in the argument.
What the law says
The problem lies in Section 10 of the Federal Reserve Act. The law states that each board member must serve for 14 years “unless earlier removed for cause by the president.” The statute does not contain language specifically referring to the president of the Board of Governors. The question that has been debated for years is what exactly constitutes “good cause.”
The language of the law is clearly more restrictive for Fed officials compared to the arrangements for Cabinet officials and other members of a presidential administration, who are often described as employees “at the discretion” of the president.
Legal experts often say that a simple policy disagreement would not be enough to constitute good cause, but it is a standard that has not been tested in court. “I’m not going to get into any of the political issues.” Powell and the legal questions come amid heightened uncertainty for the central bank following Trump’s decisive victory Tuesday night.
During his first term, then-president Trump regularly attacked Powell (even though it was Trump who appointed him to his current position) and openly pushed for the actions he wanted, even suggesting negative interest rates on one occasion.
Already on the campaign trail, Trump sent decidedly mixed signals about how far he might go to alter the central bank’s independence. He has talked for years about what he considers his authority to fire Powell, but he also downplayed that idea this summer, saying “especially if he thought he was doing the right thing.”
Most of the names include figures who have accompanied Trump for years on economic policy, from former Fed Governor Kevin Warsh, who was on the short list last time, to Kevin Hassett, who worked in the White House as a senior adviser. of Trump.
On Thursday, Powell quickly dispatched repeated political questions and tried to focus attention on the news of another rate cut. He also said Thursday that the Fed would not make immediate changes to monetary policy ahead of possible policy changes under Trump. “I’m not going to get into any of the political issues here today.”he said when another journalist tried to touch on political issues.
Source: Ambito
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