Odaily News U.S. President Donald Trump’s public criticism of Federal Reserve Chairman Jerome Powell has heightened concerns that he is trying to fire the central bank chief, but even with the historic and legally controversial move, Trump may still be unable to get monetary policy moving in the direction he wants.
Several economists said that even if Powell is fired, Trump may not necessarily get the rate cut he wants. Paul Ashworth, chief North American economist at Capital Economics, pointed out in a recent report: "Firing Powell is likely to be just the first step in undermining the independence of the Federal Reserve. If Trump is determined to lower interest rates, he must also fire the other six members of the Federal Reserve Board, which will trigger more severe market turmoil, causing the dollar to fall and the long end of the U.S. Treasury yield curve to rise."
Powell is both the chairman of the Fed's board of governors and the chair of the Federal Open Market Committee, which sets interest rate policy. Ashworth noted that while FOMC members typically choose the president of the board of governors, who is appointed by the president, to lead them, they can also defy Trump's wishes and choose someone else to head the rate-setting committee.
Trump called the Fed chairman a "major loser" in a social media post on Monday that shook financial markets. White House economic adviser Kevin Hassett said last week that the president and his team were exploring the possibility of firing the Fed chairman. However, Trump backtracked on Tuesday and said he would "definitely" fire Powell.