Reuters
President Donald Trump, reportedly angry over the U.S. central bank’s decision to raise interest rates last week, has talked about ousting Federal Reserve Chairman Jerome Powell, according to a report by Bloomberg News.
The report[1], based on “four people familiar with the matter,” said they were not convinced Trump would move against Powell, but that the president’s ire remained elevated over rising interest rates. Rates are climbing at the same time that the stock market SPX, -2.06%[2] has wiped out 2018 gains.
Read: The history of presidential Fed-bashing suggests it has not been a fruitful strategy[3]
On Friday, Trump’s economic team split publicly over the Fed.
Trump’s trade adviser Peter Navarro told a Japanese newspaper that “we” — presumably meaning the White House — didn’t want to see any more interest-rate hikes from the central bank.
The Fed has penciled in two rate hikes for 2019[4]. Navarro said that would be “two too many.”
“We don’t understand why the Fed is acting so contractionary, at a time when there’s no inflation to worry about,” he said.
White House chief economist Kevin Hassett said he disagreed with Navarro.
“That’s Peter speaking for himself,” Hassett insisted.
“I think the appropriate position for an economist in the White House is to respect the independence of the Fed and not comment on their policies,” Hassett said.
Treasury Secretary Steven Mnuchin has not shied away from talking about the Fed.
Earlier in the week, Mnuchin argued that the market had overreacted to the Fed decision. He suggested the Fed might be done raising interest rates. Some of Trump’s anger has been directed at Mnuchin for selecting Powell.
Read: When Trump tweets about the Fed, it also turns up heat on Mnuchin[5]
Experts are in agreement that Trump can’t actually fire Powell.
Central bank officials can be removed only for “cause” and that is understood not to include policy disagreements.
Read: Why Trump can’t fire Powell for disagreement over monetary policy[6]
Mark Spindel, chief investment officer at Potomac River Capital, and co-author of a book “The Myth of the Fed’s Independence” said seemingly settled administrative case law might not stop Trump from deciding to go ahead and try to remove Powell.
“I could easily imagine the president could find a lawyer to concur that there is ‘cause’ to remove the Fed chair, like malfeasance over the economy,” Spindel said in an interview with...