Amid alarm over reports Donald Trump has asked aides if he can fire the chairman of the Federal Reserve, the incoming White House chief of staff said tension between a president and the central bank is “traditional as part of our system”.
Speculation about the fate of Trump-appointed Fed chair Jerome Powell grew after Bloomberg News reported that Trump discussed firing him after this week’s interest rate increase.
Treasury secretary Steven Mnuchin recommended Powell to replace Janet Yellen when Trump went against precedent and did not renew her four-year term.
On Saturday night, Mnuchin tweeted: “I have spoken with the President [Trump], and he said, ‘I totally disagree with Fed policy. I think the increasing of interest rates and the shrinking of the Fed portfolio is an absolute terrible thing to do at this time, especially in light of my major trade negotiations which are ongoing, but I never suggested firing Chairman Jay Powell, nor do I believe I have the right to do so.’”
Pressed on the point on ABC’s This Week on Sunday, acting chief of staff Mick Mulvaney indicated the source of Mnuchin’s message when he said: “I think [Trump] put out a tweet last night specifically saying that he now realises he does not have the ability to fire.”
The chief of staff’s use of the word “now” might be seen to be telling. Trump has frequently complained about the Fed and Powell. Had they been asked, advisers would have told him it is not clear whether the law would allow a president to remove a Fed chair. If it were to happen, most observers predict market chaos in response.
Mulvaney also said it should come as no surprise that Trump was unhappy the central bank, which is an independent agency, “is raising rates and we think driving down the value of the stock market”.
This week, US markets had their worst week in the decade since the great depression, closing sharply down amid the chaos of a partial government shutdown and the surprise resignation of defense secretary James Mattis. Reports of the possible firing of Powell only stoked Wall Street worries.
Appearing on Fox News Sunday, Mulvaney disputed that the government was in crisis and said: “Yes, the stock market is down. We both know it goes up and down.
“Unemployment is still at historic lows. Capital investment still high. Business confidence is high. GDP is still solid. So, the fundamentals are still good.
“Is it going to be a rocky road with the president who is willing to mix things up to change Washington to benefit folks back home? Yes.”
