Let Donald Trump tell it and Jerome Powell is the worst Federal Reserve Chair in history, mainly because he won’t give the president what he wants — a big interest rate cut and another round of quantitative easing to stimulate the economy ahead of the 2020 election.
“President Trump will interfere with monetary policy at his peril, given Congress’s strong support for the Federal Reserve and its chair.”
Trump’s sentiment isn’t exactly shared among many members of his own party, who went out of their way to heap praise upon Powell and his steadfastness in the face of constant attacks from the president while the Fed is supposed to remain independent of political pressure.
They didn’t mention Trump by name, but it’s clear whom GOP lawmakers from both chambers of Congress are directing their message, which is: Trump’s constant jawboning of Powell and the Fed is wearing thin, and the president should be wary of following through with his threats to fire or demote him. Powell is legally locked into a four-year term.
Per The Washington Post:
“Thank you for your service,” Sen. Richard Shelby (R-Ala.) told the Fed chief in his appearance before the Senate Banking Committee on Thursday. “Thank you for your work to keep the Federal Reserve independent of both parties and do your job for what it was set up to be. We salute you for that.”
Sen. Pat Toomey, R-Pa., also told Powell he was happy to hear him say he would fulfill his term no matter what Trump says or does, “in part because I do think it’s important the Fed remain insulated from political pressure. I also want to say that I think you’ve done an outstanding job.”
Toomey also went on Bloomberg TV on Wednesday and said removing Powell would be “a very bad idea.”
Rep. Andy Barr, R-Ky., told Powell, “I think you doing an outstanding job,” while Rep. David Scott, D-Ga., urged him to “stay strong. The president can’t fire you. We in Congress, both Democrats and Republicans, got your back.”
Powell insisted Wednesday he wouldn’t leave if Trump tried to fire him, telling lawmakers that he is accountable “to you and the public.”
Trump of course insists he has the authority and just hasn’t decided to move forward — yet.
“I have the right to do that,” he said of demoting Powell to NBC last month. Trump also told The Hill he could fire Powell “if I wanted to, but I have no plans to do anything.”
The law states Trump can only remove Powell “for cause,” and refusing to lower interest doesn’t amount to “cause,” which would require illegal behavior or serious malfeasance.
Financial historian and Fed expert Peter Conti-Brown has said Trump could demote Powell if the issue ends up before the Supreme Court, but that fight would likely be resolved long before it went that far.
“Politics is everything here, so Congressional support will raise the stakes for Trump should he attempt to proceed,” Conti-Brown told The Washington Post in an email.
Conti-Brown also said Congress could pass legislation stating that Powell’s term is shielded from presidential interference, and could refuse to hold confirmation hearings for any subsequent Fed appointments if Trump tries to replace him.
As an aside, Trump has gone 0-for-4 in getting his last four Fed nominees confirmed in the Senate.
“For those who see the Trump administration swallowing Congress whole, yesterday’s hearings are a strong counterpoint,” Conti-Brown said. “They are also a warning: President Trump will interfere with monetary policy at his peril, given Congress’s strong support for the Federal Reserve and its chair.”