The White House is looking into whether President Donald Trump can fire Federal Reserve chair Jerome Powell, as the administration accuses the central bank leader of "playing politics" with monetary policy.
“The president and his team will continue to study that matter,” economic adviser Kevin Hassett told reporters at the White House.
Trump is frustrated with Powell's reluctance to lower interest rates even as inflation has fallen from its Biden-era peaks. Inflation fell to 2.4% in March, which is just above the Fed's 2% target.
The Fed hiked interest rates during the Biden presidency to combat historic inflation that surged to 9.1%.
While the Fed started lowering rates last year, Powell is cautious about adjusting them again because of the uncertain impact of Trump's tariffs.
Raising interest rates discourages borrowing and spending, which eases pressure on inflation. At same time, leaving rates raised for too long can slow down the economy.
Trump fired off a broadside on social media criticizing "Too Late" Powell's timing, while pointing to the European Central Bank's recent decision to cut rates again.
"Too Late should have lowered Interest Rates, like the ECB, long ago, but he should certainly lower them now. Powell’s termination cannot come fast enough!" Trump wrote.
The president's message followed an ominous prediction from Powell about Trump's tariffs. The central bank leader said an economic slowdown could occur simultaneously with increased inflation. That would force the Fed to strike a difficult balance between combating prices - which entails raising rates - and stimulating growth by slashing them.
"The level of the tariff increases announced so far is significantly larger than anticipated. The same is likely to be true of the economic effects, which will include higher inflation and slower growth," Powell told an audience at the Economic Club of Chicago.
Trump's critics have accused him of threatening the Fed's conventional political independence. Powell has insisted he's not going anywhere.
“Our independence is a matter of law,” Powell said Wednesday. “We’re not removable except for cause. We serve very long terms, seemingly endless terms. So we’re protected into law. Congress could change that law, but I don’t think there’s any danger of that. Fed independence has pretty broad support across both political parties and in both sides of the Hill."
Meanwhile, Trump accused Powell of "playing politics" while answering questions from reporters Thursday.
"If I want him out, he’ll be out of there real fast, believe me,” Trump said in the Oval Office. “I’m not happy with him.”
