Three roll calls a day, Trump: The Fed should have cut interest rates long ago, Powell is playing politics and should have been fired long ago
Trump said Powell's speech on Wednesday was "another typical, complete mess," accusing Powell of always being slow to act and stating that the only good thing he can do is to cut interest rates.Authors: Zhang Yaqi, Li Dan, Wall Street Journal
As the European Central Bank continues to cut interest rates, Federal Reserve Chairman Jerome Powell seems to be ignoring the advice, which has apparently angered U.S. President Donald Trump. In a single day, Trump mentioned Powell three times, calling for rate cuts and even stating that Powell should have been fired long ago.
On the morning of the 17th, Thursday, Eastern Time, Trump posted on social media:
The always late and wrong Federal Reserve Chairman Jerome Powell released a report yesterday, which is yet another typical, complete "mess"!
Powell should have lowered rates long ago like the European Central Bank, but he certainly should do it now. The sooner Powell leaves, the better!
During Thursday's midday trading session, Trump called out to Powell twice more.
Trump said, I don't think Powell is doing his job well. If I ask for it, he has to leave. Powell doesn't make me happy. He is always slow to act.
Trump accused Powell of manipulating politics, saying he is too bad. Interest rates in the U.S. have risen, and they should be pushed down. Powell should cut rates. Trump also compared the situation to Europe, saying Europe is cutting rates.
A few minutes later, Trump again "attacked" Powell, stating that the Federal Reserve should cut rates, which is what the Fed owes the American people. Powell will face significant political pressure.
Trump said the only good thing Powell can do is cut rates. If Europe cuts rates while the Federal Reserve remains indifferent, it will put the U.S. at a disadvantage. Costs are decreasing, and inflation in the U.S. is minimal.
Trump's remarks are clearly a response to Powell's hawkish statement from the previous night. On Wednesday, Powell reiterated what he said over a week ago, stating that the Federal Reserve "can completely wait until (the situation) is clearer, and then consider adjusting our policy stance." Powell believes that tariffs and other policies from Trump create high uncertainty for the economy, and the Fed needs to avoid tariffs from persistently pushing up inflation.
In fact, Trump has long been dissatisfied with Powell. Trump feels that Powell has been "slow" and "too slow" in combating inflation. He has repeatedly urged rate cuts on social media, telling Powell to "act quickly."
Supreme Court Ruling May Affect Powell's Tenure
On Monday, rumors surfaced from the White House about a "change in leadership" at the Federal Reserve. U.S. Treasury Secretary Mnuchin stated that he and Trump have "been considering" candidates for the next Federal Reserve Chairman and plan to start interviewing potential candidates in the fall.
This statement has reignited speculation about changes in the Federal Reserve's leadership. Noted financial analyst Jim Bianco believes that Powell may face two fates: either being directly dismissed by Trump or being sidelined, as a nominee for Powell's successor could make statements that undermine his authority.
It is worth noting that a ruling from the U.S. Supreme Court in May could become a "black swan" event this summer. Trump's administration is preparing to ask the Supreme Court to dismiss two senior officials from federal agencies.
Some analysts point out that the final ruling in this case will test "whether Trump has the authority to dismiss Federal Reserve Chairman Powell"—despite the current Federal Reserve Act requiring "just cause" for dismissing the Fed Chairman, if the Supreme Court overturns the "Humphrey's Executor" precedent, it would undoubtedly weaken this protective barrier and open the door for presidential intervention in the operations of the Federal Reserve.
In other words, by changing the legal rules, Trump may be able to "easily" dismiss the Federal Reserve Chairman in the future.
On Wednesday, when asked about the political threats facing the position of Federal Reserve Chairman, Powell stated that the independence of the Federal Reserve is granted by U.S. law, and the government cannot dismiss Fed officials without cause. He said, "Our (Federal Reserve) independence is a legal issue."
Powell stated that the Federal Reserve will continue to do what it needs to do, unaffected by political influences. Regardless of the political pressure faced, the Federal Reserve will perform its duties well.
