Donald Trump is clearly not served by Federal Reserve (FED) chairman Jerome Powell. The problem? The interest rates have been too high for too long. For that reason, the president has indicated several times that he wanted to send him the avenue, according to several conversations with confidants within his circle. But that’s not that easy.
White House divided
Trump is dissatisfied with the interest rate policy of the central bank and accuses Powell of “playing political games”. According to Trump, the Fed keeps the interest artificially high, which according to him is harmful to the economy. Although higher interest rates can help curb inflation, on the other hand it ensures even higher government debts.
During meetings at his Mar-A-Lago resort, Trump would have repeatedly discussed the resignation of Jerome Powell. He would even have discussed the former Fed Governor Kevin Warssh as a possible successor. Warssh, not in favor of an abrupt procedure, advised to have Powell finished his term. Within the White House there is division about the plan: where some people see it as a necessary price correction, others warn of legal risks and market disruption.
Powell remains determined
But dismissing is not just possible. The FED operates independently of the US government. According to the Federal Reserve ACT, members of the FED may only be relieved in exceptional cases. Consider serious misconduct or incompetence, not because of policy differences.
A possible route runs through the courts, where an attempted dismissal could end at the American Supreme Court. The legal basis is uncertain. According to the law, directors of the FED may only be dismissed with a good ‘reason’, and there is no further precedent for the premium removal of a FED chairman.
Powell has also indicated that he does not just let himself be put aside. He will oppose a dismissal by Trump. The policy body that decides on the interest rates, the Federal Open Market Committee (FOMC), could make it even more difficult for the president by re -designating him as chairman when his position comes up for discussion.
Source: https://newsbit.nl/rente-te-hoog-trump-smeedt-plannen-om-powell-te-dumpen-als-fed-baas/
