Trump Says He Could Demote Fed Chair Powell, Risking More Market Turmoil

The central bank’s policy-setting committee meets this week in Washington, and it is widely expected to cut interest rates — perhaps to near zero — at or before that gathering. It could also renew bond buying or roll out other emergency programs meant to stabilize the inner workings of financial markets, economists expect.

Mr. Trump probably does not have the legal authority to fire Mr. Powell, whom he nominated in 2017 but who was confirmed by Congress. It is less clear whether the president could demote him, but if he tried, the Federal Open Market Committee — which sets interest rates — could still select Mr. Powell as its leader, rendering any new chair mostly irrelevant.

This is not the first time Mr. Trump has aired the idea of removing his hand-selected Fed chair. In December 2018, after the Fed raised rates, the president privately talked about firing Mr. Powell, telling advisers that the Fed chair would “turn me into Hoover,” a reference to the Great Depression-era president Herbert Hoover. The statements caused jitters on Wall Street.

Mick Mulvaney, who had recently been named the acting White House chief of staff, said in a subsequent television interview that Mr. Trump “now realizes he does not have the authority to fire” the Fed chair.

This time around, Mr. Tedeschi said he doubted the president would try to demote Mr. Powell, and was probably just trying to jawbone the central bank ahead of its meeting this week.

“I think people are used to it, at this point,” he said. “But it probably doesn’t help.”

Article source: https://www.nytimes.com/2020/03/14/business/economy/trump-powell-fed-chair.html