US President Donald Trump threatened to fire Federal Reserve Chair Jerome Powell from his separate seat on the U.S. central bank’s Board of Governors if Powell does not vacate that post as well when his term as Fed chief ends on May 15, intensifying a complicated standoff that has upended the Fed’s usually smooth transition of power.
On wednesday,Trump administration threats against Powell, including an ongoing criminal investigation, could delay Senate confirmation of Kevin Warsh as Trump’s nominee to succeed Powell as Fed chief, but the president in a Fox Business interview doubled down on the probe as a way to prove Powell’s “incompetence” and said if he doesn’t leave altogether, “then I’ll have to fire him.”
“You want Jay Powell out of the way?” the president was asked by Fox Business host Maria Bartiromo.
“If he’s not leaving on time – I’ve held back firing him, I’ve wanted to fire him, but I hate to be controversial, you know. I want to be uncontroversial, but he will be fired,” Trump responded. He gave no indication that U.S. Attorney for the District of Columbia Jeanine Pirro would back down from investigating a Fed building project the administration has criticized for cost overruns.
Trump’s language underscored the stakes, and the potential complications the administration faces if Powell doesn’t leave the seven-member Fed board.
With greater control of seats on the board, Warsh would have a freer hand in setting monetary policy and making other changes at the central bank that the administration might seek. Trump has appointed only three of the current members, and one of them, Fed Governor Stephen Miran, is in a seat whose term has already expired and, as it stands, would have to be vacated for Warsh to join.
Probe complicates Kevin Warsh confirmation process:
Three of the Fed’s seven governors were appointed by former President Joe Biden; Powell was promoted to the top central bank job by Trump, but has proved himself independent of the president’s pressure and threats; and even Trump appointees like Fed Governor Christopher Waller are considered unlikely to support radical change or even abide by Trump’s advice on interest rates.
As a consequence, administration efforts to clear room on the board, such as through a move to fire Fed Governor Lisa Cook, a case that is pending in the U.S. Supreme Court, have become all the more urgent in the discussion of the Fed’s standing as an independent central bank able to set rates free of political influence.
