Trump Wants to Fire Fed Chair Powell

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News of Trump's discussions about Powell prompted rebukes from lawmakers and alarm among economists and Wall Street executives Saturday.

"I think we are hearing something important for markets and that is a concern around risks to the economy and potential slowdown", New York Federal Reserve Bank President John Williams said Friday on CNBC.

Yet the president has talked privately about firing Powell many times in the past few days, said two of the people.

The problem is, if the "cause" is "Trump doesn't like the interest rates" then it really would be for a policy reason, which would destroy the purposefully designed independence of the body.

Trump has shattered many norms since becoming president, but one that has caught investors and economists off-guard is his willingness to publicly rail against central bank policy.

Whipsaw markets and a string of steep dives have spawned a pervasive anxiety in the White House, according to senior officials, where for the past two years the strength of the USA economy has provided steady reassurance amid even the deepest of political crises.

Trump cast this tradition aside.

The Fed's November statement said rate increases were expected, while now it "judges that some further gradual" hikes are in store, which Williams said "is not a commitment or promise in any way".

Well, Bloomberg is reporting that President Trump is reportedly furious over the move. But investors' concerns over the chairman's comments led to USA equities to record their steepest declines for any Federal Open Market Committee announcement day since 2011. It would come as markets have plummeted in recent weeks, with the major stock indexes already down sharply for the year.

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Donald Trump is unhappy with Federal Reserve Chairman Jerome Powell and wants to fire him.

The Fed declined to comment.

With hundreds of billions of dollars in goods hit by retaliatory tariffs, United States exports fell by the largest amount since early 2009 at the height of the global financial crisis, according to the report, the third and final reading on third quarter GDP.

The Federal Reserve has always been viewed as being independent from political sway. "That is so reckless that [National Economic Council Director Lawrence] Kudlow and probably Mnuchin would resign, just as [Defense Secretary Jim] Mattis did".

Stocks continued their steep decline Thursday, a day after the Federal Reserve raised rates. Since the chairman is also a governor, that presumably extends to him or her, but the rules around firing the leader are legally ambiguous, as Peter Conti-Brown of the University of Pennsylvania notes in his book on Fed independence. The law is silent on whether someone at the Fed can be stripped of the chair position.

It was unclear if Trump has the authority to fire Powell, according to USA media. "The market is acting like we're moving to a phase of a synchronized global bear market", he said.

If Trump succeeded at removing Powell from the chair position, it's uncertain what would follow. "The independence of the Fed is the foundation of our banking system". Meanwhile, it's not clear that any of the other Fed governors would take the Fed in a different direction.

Even more significant though, is that it may not even be legal for the president to fire the chairman merely for having a difference of opinion. There are only five governors now appointed, which means decisions are split between those serving in Washington and the regional Fed presidents, who are not appointed by Trump.

There are worries, however, that the economy could enter choppy waters next year as the fiscal boost from the Trump administration's spending and $1.5 trillion tax cut package fades and the global economy slows.