Trump says 'not planning' fire Fed Chair Powell after reports suggest Powell ouster coming 'soon'

Yahoo

2 days ago

President Trump on Wednesday tempered reports from earlier in the day that suggested he planned to fire Federal Reserve Chair Jerome Powell imminently, the latest twist in the ongoing saga regarding Trump's displeasure with the central bank head.
Speaking to reporters in the Oval Office late Wednesday morning, Trump said he is "not planning" to fire Powell, though he reiterated his view that rates should be lower and the Fed chair is doing a "terrible job."
"I don't rule out anything, but I think it's highly unlikely, unless he has to leave for fraud," he added when asked about a firing.
Trump's comments came just about an hour after a slew of reports suggested the president was inching closer to firing Powell.
Bloomberg reported that the president was likely to remove Powell "soon," quoting a White House official. CBS News reported that Trump indicated to lawmakers he would do so while polling House GOP members Tuesday night about whether he should go through with it.
The New York Times reported that Trump even showed those lawmakers a draft of a Powell firing letter in the Oval Office on Tuesday night. But Bloomberg and the New York Times also noted in their reports that Trump has not made a final decision.
Following Trump's comments on Wednesday, markets erased some of the losses suffered after the initial reports Trump would fire Powell in short order.
Trump also said Wednesday he had not drafted a letter regarding Powell's firing, but he did acknowledge floating the idea of removing Powell with GOP lawmakers Tuesday night.
"I talked to them about the concept of firing him," Trump said. "I said, 'What do you think?' Almost all of them said I should. But I'm more conservative than they are."
Trump's new comments came less than 24 hours after he told reporters that Powell's handling of a $2.5 billion renovation of the Federal Reserve headquarters "sort of is" a fireable offense. On Wednesday, he added, "I mean it's possible there's fraud involved with the $2.5 billion renovation."
Any final move by the president to oust the Fed chair could lead to a legal war with Powell, who has argued that he cannot be removed by law.
In his latest comments, Trump also appeared to narrow his choices to replace Powell. Treasury Secretary Scott Bessent is an "option" but not the top choice, "because I like the job he is doing," Trump said.
The Washington Post and Bloomberg reported this week that National Economic Council Director Kevin Hassett is rising as an early front-runner in the race to replace Powell, although former Fed governor Kevin Warsh is also under consideration. Fed governor Christopher Waller is another possibility.
Trump on Wednesday acknowledged he was considering Hassett. Bessent, though, is "probably not that much of an option," Trump said Tuesday, citing what he views as Bessent's good performance as Treasury secretary.
"He's a very soothing force."
Trump has been hammering Powell for months over what Trump viewed as a refusal to ease monetary policy for political and personal reasons, referring to Powell publicly as "dumb," a "numbskull," a "stubborn mule," "stupid," a "moron," and a "fool."
Trump nominated Powell for the Fed chair seat during his first administration. His current term is scheduled to run until May 2026.
Read more: How much control does the president have over the Fed and interest rates?
Trump's allies in recent weeks have used another tactic to turn up the pressure on Powell: They have invoked a $2.5 billion renovation of the Fed's headquarters as a way to question the chair's management of the institution and whether he told Congress the truth about the project during testimony in June.
Trump said Tuesday that "the one thing I wouldn't have guessed is he would be spending two and a half million dollars to build a little extension onto the Fed."
When asked if it was a fireable offense, Trump said, "I think it sort of is, because if you look at his testimony ... he's not talking about the problem. It's a big problem."
One House Republican, Florida Rep. Anna Paulina Luna, posted on X Tuesday night: "Hearing Jerome Powell is getting fired! From a very serious source," and later added, "I'm 99% sure firing is imminent."
CBS also reported that some members of the House Committee on Financial Services, which acts as oversight for the Fed, were planning to meet with Powell on Wednesday night and that some want to reinforce his independence. Semafor later reported that the meeting had been canceled.
Top administration officials have sent mixed signals about how far Trump would go with Powell.
Hassett said Sunday on ABC News's "This Week" that whether the president has the legal authority to fire Powell before his term is up next May "is being looked into" and that "certainly, if there's cause, he does."
But Treasury Secretary Scott Bessent told Bloomberg Tuesday that the president "said numerous times he's not going to fire Jay Powell" and compared Trump's public pressure to former college basketball coach Bobby Knight "working the refs."
"President Trump seems to prefer the Bobby Knight school," he said.
Bessent also said Tuesday that "there's a formal process that's already starting" to find Powell's replacement. He also hopes Powell decides to leave the Fed board when his term as chair is up. His seat on the Fed Board of Governors is not up until 2028.
Trump has also sent mixed signals in recent months about whether he would seek to remove Powell, musing about it publicly before assuring he wouldn't do it.
Wall Street is paying close attention to the drama unfolding in Washington, D.C.
JPMorgan Chase (JPM) CEO Jamie Dimon said Tuesday that the independence of the Federal Reserve is "absolutely critical" and warned that "playing around with the Fed can often have adverse consequences."
Goldman Sachs (GS) CEO David Solomon told CNBC Wednesday that "I think central bank independence, Fed independence, is very important and it's something we should fight to preserve."
A firing by Trump could potentially open a new legal war with Powell, who has argued that his removal is "not permitted by law."
The only language in law pertaining specifically to the removal of Fed board members can be found in Section 10 of the Federal Reserve Act. The law states that each member of the board shall hold office for 14 years "unless sooner removed for cause by the President."
The statute doesn't have any language that specifically addresses the chair of the Board of Governors, nor does it detail what exactly constitutes "for cause." The term has been interpreted in legal rulings to mean "inefficiency, neglect of duty, or malfeasance."
But Powell and the Fed could still have the backing of the Supreme Court, which made it clear in a May decision it might protect the central bank even as it allowed Trump to fire the board members of two other independent agencies: the National Labor Relations Board and the Merit Systems Protection Board.
The central bank, the court said, "is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States."
Trump is trying to challenge a 90-year-old Supreme Court precedent limiting the president's power to dismiss independent agency board members except in cases of neglect or malfeasance.
If that precedent eventually falls, a Powell firing may be easier to legally justify at the Fed.
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