Economist Mohamed El-Erian says Fed chair Powell should resign
'By staying in office, is Powell defending independence or is he exposing it to greater threats?' he said, when asked by The National during a conference co-hosted by the World Bank and Centre for Global Development in Washington.
'If you see what has happened over the past few weeks is that the attacks have evolved from simply being attacks on him personally to being attacks on the institution.'
The White House has increased its pressure on the Fed to cut interest rates this year, with Mr Trump calling for low rates to help service the nation's debt, a concept known as fiscal dominance.
The Fed has paused its interest rate cuts after reducing policy in the final months of 2024, owing to uncertainty surrounding President Donald Trump's tariffs policies. The extended pause has drawn the increasing ire of the White House.
The administration's latest line of attack has been on continuing renovations at the Fed's headquarters in Washington, where costs have risen to $2.5 billion. Trump officials have accused Mr Powell of grossly mismanaging the Fed, citing the renovation, which some see as grounds for a sacking.
Mr Powell has linked cost overruns to unforeseen conditions such as more asbestos than anticipated, contamination in the soil and a higher-than-expected water table.
'This tension between the President and the chairman of the Fed, if it continues, it will suck in more elements of the Fed,' Mr El-Erian said.
Mr Powell has said that he intends to serve out his term as chairman, which expires in May 2026, and that Mr Trump has no legal authority to fire him.
Tensions simmered last week following reports that Mr Trump indicated to Republicans in the House of Representatives that he was open to firing Mr Powell. While Mr Trump confirmed he brought up the idea, he said it was 'highly unlikely' that he will sack the chairman.
The reports led to a brief spike in long-term yields and a weakening in the US dollar before they pared back some losses after Mr Trump's comments.
Those reported as possible replacements for the Fed chairman include National Economic Council head Kevin Hassett, former Fed governor Kevin Warsh, Treasury Secretary Scott Bessent and current Fed Governor Christopher Waller.
Mr El-Erian said the reported list of candidates would help calm market jitters.
'It's a very controversial argument, but it is underpinned by the need to maintain the critical importance of central banking,' he said.
In an interview with Fox Business earlier on Tuesday, Mr Bessent said Mr Powell should not resign.
'There's nothing that tells me that he should step down right now,' he said. 'His term ends in May. If he wants to see that through, I think he should. If he wants to leave early, I think he should.'
Mr Bessent on Monday had called for the 'entire review' of the Federal Reserve system's non-monetary policy operations. He also called for a review into the Fed's building renovations.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The National
2 hours ago
- The National
Economist Mohamed El-Erian says Powell should resign to protect Fed
Egyptian-American economist Mohamed El-Erian broke ranks on Tuesday by suggesting Jerome Powell should resign as US Federal Reserve chairman, arguing that doing so would protect the US central bank's independence. 'By staying in office, is Powell defending independence or is he exposing it to greater threats?' he said, when asked by The National during a conference co-hosted by the World Bank and Centre for Global Development in Washington. 'If you see what has happened over the past few weeks is that the attacks have evolved from simply being attacks on him personally to being attacks on the institution.' The White House has increased its pressure on the Fed to cut interest rates this year, with US President Donald Trump calling for low rates to help service the nation's debt, a concept known as fiscal dominance. The Fed has paused its interest rate cuts after reducing policy in the final months of 2024, owing to uncertainty surrounding Mr Trump's tariffs policies. The extended pause has drawn the increasing ire of the White House. The administration's latest line of attack has been on continuing renovations at the Fed's headquarters in Washington, where costs have risen to $2.5 billion. Trump administration officials have accused Mr Powell of grossly mismanaging the Fed, referring to the renovations, which some regard as a pretext for ousting him. Mr Powell has linked cost overruns to unforeseen conditions such as more asbestos than anticipated, contamination in the soil and a higher-than-expected water table. 'This tension between the President and the chairman of the Fed, if it continues, it will suck in more elements of the Fed,' Mr El-Erian said. Tensions simmered last week following reports that Mr Trump indicated to Republicans in the House of Representatives that he was open to firing Mr Powell. While Mr Trump confirmed he brought up the idea, he said it was 'highly unlikely' that he will sack the chairman. The reports led to a brief spike in long-term yields and a weakening in the US dollar before they pared back some losses after Mr Trump's comments. Those reported as possible replacements for the Fed chairman include National Economic Council head Kevin Hassett, former Fed governor Kevin Warsh, Treasury Secretary Scott Bessent and current Fed Governor Christopher Waller. Mr El-Erian said the reported list of candidates would help calm market jitters. 'It's a very controversial argument, but it is underpinned by the need to maintain the critical importance of central banking,' he said. Mr Trump continued his attacks on the Fed chairman on Tuesday. "I think he's done a bad job, but he's going to be out pretty soon anyway. In eight months, he'll be out," Mr Trump said before a meeting with Philippines President Ferdinand Marcos Jr at the White House. It was not immediately clear why Mr Trump mentioned that timeline, which would come before Mr Powell's term as Fed chairman ends in May 2026. Mr Powell has said repeatedly that he intends to serve out his term and that Mr Trump has no legal authority to remove him. In an interview with Fox Business earlier, Mr Bessent said Mr Powell should not resign. 'There's nothing that tells me that he should step down right now,' he said. 'His term ends in May. If he wants to see that through, I think he should. If he wants to leave early, I think he should.' Mr Bessent on Monday had called for the 'entire review' of the Federal Reserve system's non-monetary policy operations. He also called for a review of the Fed's building renovations.
Khaleej Times
7 hours ago
- Khaleej Times
Trump agrees to small reduction in Philippine tariffs after trade talks
US President Donald Trump agreed Tuesday to reduce threatened tariffs on the Philippines, but only by one percentage point, after what he termed a successful meeting with his counterpart Ferdinand Marcos. Welcoming Marcos to the White House, Trump called him a "very tough negotiator" and said: "We're very close to finishing a trade deal — a big trade deal, actually." In a social media post shortly afterward, Trump said that while the Philippines would open up completely to US goods, he would still impose a 19 per cent tariff on products from the Southeast Asian country, a major exporter of high-tech items and apparel. "It was a beautiful visit, and we concluded our Trade Deal, whereby The Philippines is going OPEN MARKET with the United States, and ZERO Tariffs," Trump wrote on his Truth Social platform. The Philippines was among two dozen economies confronted by Trump with letters this month warning of 20 per cent tariffs on all goods coming into the United States as of August 1. The 19 per cent rate is still above the 17 per cent threatened by Trump in April, when he threatened sweeping global tariffs. The trade rift comes despite increasingly close defence relations between the United States and the Philippines, a former US colony and treaty-bound ally that has seen high tensions with China. The United States last year, under Trump's predecessor Joe Biden, deployed ground-launched missiles in the Philippines. Washington has also eyed ammunition manufacturing in the Philippines, despite the closure in 1992 of the US naval base at Subic Bay due to heavy public pressure. "All of what we consider part of the modernization of the Philippine military is really a response to the circumstances that surround the situation in the South China Sea," Marcos said next to Trump. Trump devoted much of the appearance to attacks on his Democratic predecessors Biden and Barack Obama. "We are essentially concerned with the defense of our territory and the exercise of our sovereign rights," said Marcos. "Our strongest, closest, most reliable ally has always been the United States."
The National
8 hours ago
- The National
Wife of ICEBlock developer considers legal options after firing from Justice Department
A woman who was fired as an auditor for the US government because of an immigration police-tracking app her husband created says she is weighing her legal options. The Department of Justice says Carolyn Feinstein has a 'sizeable interest' in the company which developed the ICEBlock app, ALL U Chart. Trump administration officials have taken issue with the app, which has more than one million downloads and allows users to report sightings of Immigration and Customs Enforcement (ICE) officials. 'ICEBlock is an app that illegal aliens use to evade capture while endangering the lives of ICE officers by disclosing their location,' a Justice Department representative told The National. 'This DoJ will not tolerate threats against law enforcement or law enforcement officers.' Ms Feinstein, who worked from the DoJ's Austin, Texas office as a forensic auditor, was fired from her job at the weekend. She told The National that while she owns a portion of All U Chart, her husband, Joshua Aaron, is the majority owner. She said she is listed as a stakeholder so she could wind down the company in the event something were to happen to her husband. 'I had no part in developing the app, coding the app, or marketing the app in any way,' she said. 'My only relation to it is that I'm married to the creator.' She said she is exploring potential legal options to challenge her dismissal, and looking for new career opportunities. 'There's going to be bigger and better things out there,' she said. Mr Aaron said his company, All U Chart, is currently working on a healthcare app unrelated to the ICEBlock app that has become the source of ire in the Trump administration. Since its release this year, the app has gained popularity as President Donald Trump approved significant funding increases for ICE, whose mandate includes detaining and deporting undocumented immigrants. Masked ICE agents have swept up thousands of migrants in a nationwide dragnet that has sometimes snared US citizens and green card holders. Current and former detainees have said they were kept in dismal conditions in ICE custody, charges the agency denies. 'When I saw what was happening in this country I knew I had to do something to fight back,' said Mr Aaron, who lives in Texas, a state with a large undocumented immigrant population. Mr Aaron, who is Jewish, told The National in an interview last week that he had decided to create the app after meeting Holocaust survivors and learning about Adolf Hitler's rise to power in Nazi Germany. The app aims to alert users to the presence of ICE officials within an 8km radius. It is powered by crowdsourced data and relies on people reporting where ICE agents are. ICEBlock also allows users to describe the vehicles ICE agents are using and the clothes they are wearing. When a sighting is reported, push notifications are sent to nearby users. It is only available for iPhone. According to Mr Aaron, the privacy settings he deems necessary for ICEBlock are not yet possible on Android devices. US Attorney General Pam Bondi has suggested that the app should be considered illegal, and recently told Fox News that the Justice Department was 'looking into' the developer, Mr Aaron. Mr Aaron acknowledges criticism that the software has the potential to be misused, as the Trump administration has claimed violence against ICE agents is on the rise. 'Please note that the use of this app is for information and notification purposes only,' reads a disclaimer appearing throughout ICEBlock, with an added warning that the app should not be used 'for the purposes of inciting violence or interfering with law enforcement'. Mr Aaron says ICEBlock is strictly designed to inform, and not to obstruct. Laura Loomer, a far-right activist well known for her controversial and xenophobic comments, posted information about his wife on X last week. 'I reviewed Carolyn's LinkedIn page, and she has been working for the DOJ since January 2021 when Joe Biden assumed office,' said Ms Loomer's post.
