Trump asks officials if he can legally sack Fed chief: Reports, Latest Business News - The New Paper

Trump asks officials if he can legally sack Fed chief: Reports

This article is more than 12 months old

Attempt could be seen as an attack on the US central bank's independence

WASHINGTON: US President Donald Trump privately discussed the possibility of firing Federal Reserve Chairman Jerome Powell, a move that could roil already volatile financial markets, two sources familiar with situation said on Saturday.

The sources added that they do not expect Mr Trump to dismiss the US central bank chief, despite the president's public and private objections to the Fed's interest rate-hiking campaign and his repeated criticisms of Mr Powell, whom he appointed.

US Treasury Secretary Steven Mnuchin, however, tweeted on Saturday that Mr Trump had told him that he never suggested dismissing the Fed chief.

"I never suggested firing Chairman Jay Powell, nor do I believe I have the right to do so," Mr Mnuchin quoted Mr Trump as telling him.

The White House and a Fed spokesman declined to comment.

An attempt to remove the Fed chairman would be unprecedented and seen as an attack on the US central bank's independence, which is meant to insulate it from political considerations. It would be on potentially shaky legal ground, and would probably hit financial markets around the globe hard.

The Federal Reserve Act allows a president to dismiss a Fed board member for "cause", and Mr Trump's frustrations with the central bank's rate hikes would likely fall short of that mark.

The law, however, is untested on dismissing a chairman, who also holds a separate term as a board member.

Mr Trump's top economic adviser, Mr Larry Kudlow, said last month he did not believe it would be possible for Mr Trump to remove Mr Powell as chairman.


CNN, citing two people familiar with the matter, said Mr Trump had begun polling advisers about his legal authority, but that the White House had not come up with a final determination.

It said Mr Trump's advisers told the president earlier this year that it was doubtful he had legal authority to dismiss the Fed chief.

Mr Trump has frequently attacked Mr Powell, who was sworn in as Fed chairman early last February, and the Fed for raising borrowing costs this year, especially as US stocks have tumbled and yields on US government debt have begun to signal a possible recession ahead.

Bloomberg News was first to report that Mr Trump has been privately discussing firing Powell.

The Fed's independence has been a mainstay of the US financial system and is one of the reasons the dollar is the global reserve currency. - REUTERS