Jay Powell says Donald Trump couldn’t fire him even if he tried
President-elect Donald Trump has sent mixed signals for years on whether he would aim to fire or demote Fed Chair Jerome Powell when he reenters the Oval Office next year.
But Powell himself laid down a marker Thursday that he won’t be going anywhere, even if Trump tried.
“Not permitted under the law,” the central bank chair said Thursday in curt but clear responses to reporters who asked about his views on any legal authorities Trump might have in terms of firing or demoting him or any other top Fed officials.
“No,” he said at another point in a press conference on the question of whether he would leave.
It could be a point of conflict in the months ahead. Trump has signaled he may not be inclined to fire Powell but has also maintained he has that power.
For his part, Trump reiterated the idea of firing Powell in a 2020 news conference when he bluntly said, “I have the right to remove” Powell.
U.S. President Donald Trump looks on as his nominee for the chairman of the Federal Reserve Jerome Powell takes to the podium during a press event in the Rose Garden at the White House, Nov. 2, 2017. (Drew Angerer/Getty Images) · Drew Angerer via Getty Images
He added that he could also demote Powell from his position as chair, “put him in a regular position, and put somebody else in charge.”
It’s an unsettled legal question, though, with many experts falling on Powell’s side of the argument.
At issue is Section 10 of the Federal Reserve Act. The law states that each member of the board shall hold office for 14 years “unless sooner removed for cause by the President.” The statute doesn’t have any language that specifically addresses the chairman of the Board of Governors.
Read more: How much control does the president have over the Fed and interest rates?
The question that has been debated for years is what exactly constitutes “for cause.”
The language in the law is plainly more restrictive for Fed officials when compared with the arrangements of cabinet officials and other members of a presidential administration, who are often described as working “at the pleasure” of the president.
Legal experts have tended to say that a simple policy disagreement wouldn’t rise to the level of cause, but it’s a standard that hasn’t been tested with a judge.
The comments from Powell and the legal questions come amid massive uncertainty for the central bank following the decisive win for Trump on Tuesday night.
During his first term, then-President Trump attacked Powell with regularity (even though it was Trump who had elevated him to his current role) and openly pushed for the actions he wanted, even once suggesting negative interest rates.
Esther George, the former president of the Kansas City Fed, also weighed in on possible implications of a Trump presidency in a Yahoo Finance interview on Thursday afternoon.
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“It could be unsettling to markets,” she said about Trump possibly meddling in monetary policy.
She added that the years ahead “will require the Fed to stand up to pressures that it may receive, whether they’re simply rhetoric or they are more direct threats. But I think the Fed is well prepared and able to focus on where its mandate lands.”
Federal Reserve Board Chairman Jerome Powell speaks during a news conference Thursday. (AP Photo/Mark Schiefelbein) · ASSOCIATED PRESS
On the campaign trail, Trump has sent decidedly mixed signals about how far he might go to upend central bank independence.
He has talked for years about what he sees as his authority to fire Powell but he’s also downplayed the notion this summer “especially if I thought he was doing the right thing.”
That’s a message that appears to be continuing, with CNN reporting Thursday that a senior adviser to the president-elect said he would be likely to “allow” Powell to serve the remainder of his term.
In any case, Trump is now set to choose Powell’s replacement eventually when his term as chair ends in May 2026. Trump has been clear that no third term will be in the offing.
Most of the names include figures who have surrounded Trump for years on economic policy — from former Fed governor Kevin Warsh, who was on the shortlist last time, to Kevin Hassett, who worked in the White House as a senior adviser to Trump.
On Thursday Powell dispatched with the repeated political questions quickly and tried to keep the focus on news of another rate cut.
He also said Thursday that the Fed would be making no immediate changes to monetary policy ahead of possible policy changes coming under Trump.
“I’m not going to get into any of the political things here today,” he said when another reporter tried to get into political topics.
This post has been updated with additional context.
Ben Werschkul is a Washington correspondent for Yahoo Finance.
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