- President Donald Trump is actively considering the possibility of removing Federal Reserve Chairman Jerome Powell, whom he appointed, due to dissatisfaction with the Fed’s reluctance to lower interest rates, as confirmed by National Economic Council Director Kevin Hassett on Friday.
- Hassett accused the Fed of political bias, claiming it raised rates post-Trump’s election to counter tax cuts and failed to address inflationary spending under Biden, while cutting rates before the election.
- Trump’s public criticism of Powell, including his assertion that he could swiftly oust the Fed chair, raises concerns about the central bank’s independence amidst calls for policy alignment with his economic agenda.
President Donald Trump’s ongoing scrutiny of Federal Reserve Chairman Jerome Powell, as reported by Bloomberg, underscores a contentious debate over monetary policy and the independence of the central bank. Trump, who appointed Powell during his first term, has openly criticized the Fed chair for not swiftly reducing interest rates, asserting during an Oval Office event on Friday that a competent Fed leader would lower rates to stimulate economic growth. The president’s remarks, coupled with his suggestion on Thursday that he could remove Powell “real fast” if desired, have raised questions about potential efforts to influence or even oust the Fed chair, a move that would challenge the institution’s autonomy. Kevin Hassett, Trump’s National Economic Council Director, confirmed on Friday, as per the B’berg report, that the president and his team are studying the possibility of firing Powell, though he emphasized a preference for focusing on policy disagreements rather than personal conflicts.
Hassett’s critique of the Fed’s actions under Powell points to perceived political biases, claiming the central bank raised rates immediately after Trump’s election to counter supply-side tax cuts falsely labeled as inflationary. He further argued that the Fed failed to publicly address the inflationary risks of what he described as “obvious runaway spending” under President Joe Biden, yet cut rates ahead of the election, implying a partisan tilt favoring Democrats. These accusations reflect a broader tension between the Trump administration’s economic priorities and the Fed’s mandate to balance inflation and employment without political interference. Trump’s dismissal of inflation concerns during his Friday remarks, where he reiterated his call for lower rates, suggests a belief that monetary policy should align more closely with his growth-oriented agenda.
The Fed’s independence, a cornerstone of its ability to make data-driven decisions, has historically been a point of contention for presidents seeking greater control over economic levers. Powell, whose term as chair extends beyond Trump’s current presidency, operates within a framework designed to shield the Fed from short-term political pressures. However, Trump’s public statements, including his Thursday comments during a meeting with Italian Prime Minister Giorgia Meloni, signal an intent to challenge this norm, even as he sidestepped direct questions about pursuing Powell’s removal. Hassett’s defense of Trump’s frustration, articulated on Friday, frames the president’s stance as a legitimate response to the Fed’s policy missteps, though it risks escalating perceptions of an assault on institutional norms. It goes without saying that this dynamic highlights a critical juncture for the Federal Reserve’s role in navigating economic policy amid heightened political scrutiny.
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