White House: "The Issue of Dismissing Powell Remains Under Review"
U.S. President Donald Trump is reportedly aware that his actions to undermine Jerome Powell, the Chair of the Federal Reserve (Fed), could trigger major turmoil in the financial markets.
The New York Times (NYT) reported on the 18th (local time), citing sources close to President Trump, that the president himself recognizes that dismissing Chair Powell could bring even greater volatility to an already unstable financial market. Advisors have recently informed President Trump that removing Powell could raise legal issues and cause shocks to the financial markets due to increased uncertainty.
Previously, President Trump had urged Chair Powell to lower the benchmark interest rate and even mentioned the possibility of replacing him during his term. The day before, in response to Powell's critical remarks about his tariff policy, President Trump said, "Powell's term should end quickly," and "If I want his resignation, he will step down very quickly."
Chair Powell has publicly stated that the Trump administration's tariff policies are expected to lead to rising inflation and slower economic growth. Under Powell's leadership, the Fed has kept the benchmark interest rate unchanged for two consecutive meetings at the Federal Open Market Committee (FOMC) last month, signaling disagreement with the Trump administration's policies.
President Trump fears that an event similar to the Great Depression of 1929 could occur during his presidency. The turmoil in the financial markets, including a stock market plunge following the announcement of reciprocal tariffs on the 2nd, has heightened President Trump's anxiety. He postponed the implementation of reciprocal tariffs for 90 days, citing the need for time to negotiate with countries that requested talks over tariff issues.
It is also known that, even before taking office, President Trump considered removing Powell before the end of his term and appointing Kevin Warsh, a former Fed governor, as his replacement. In this process, President Trump reportedly reviewed the legal grounds and potential ramifications of dismissing Powell.
However, the president does not have the legal authority to dismiss the Fed Chair over policy disagreements. According to the Federal Reserve Act, which serves as the foundation for the Fed's existence, a Fed governor can only be removed for cause.
The White House maintains that it will continue to review the issue of dismissing Chair Powell. Kevin Hassett, Chairman of the White House National Economic Council (NEC), told reporters at the White House that "President Trump and his team will continue to review the matter" when asked about the possibility of removing Chair Powell.
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