As reported by Bloomberg, Wall Street is seen as the ultimate job security for US Federal Reserve chairman Jerome Powell as US President Trump’s wrath increasingly turns on Powell, who was Trump’s own pick for the top spot at the US Fed.
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“President Donald Trump could confront a huge blow back from the financial markets — with stocks, bonds and the dollar all going down — if he made a serious move to oust the Federal Reserve chairman, market professionals say.
“There would be a very bad reaction in the markets,” said Jim Paulsen, chief investment strategist at Leuthold Weeden Capital Management LLC in Minneapolis. Such a move “would introduce an incredible amount of uncertainty.”
The president has been withering in his criticism in recent weeks of Powell and the Fed for raising interest rates, calling the central bank the biggest threat to the economy. Asked by The Wall Street Journal on Oct. 23 if he would consider removing the Fed chair, Trump replied, “I don’t know.”
Powell and his team have responded to the attacks by saying they’ll do what they think is best for the economy and not be swayed by politics. And what they think is best for now is to continue gradually raising interest rates.
Under the law, Trump can fire members of the Fed’s board “for cause” — an amorphous concept that’s generally come to mean inefficiency, neglect of duty, or malfeasance.
Presidential pressure on the Fed is not unprecedented. While Trump’s immediate predecessors — Bill Clinton, George W. Bush “and Barack Obama — did refrain from publicly chastising the central bank, those who came before them were not so reticent.
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