White House explored legality of demoting Fed Chair Jerome Powell: Report
The White House on Tuesday said that it is not exploring the legality of demoting Federal Reserve Chairman Jerome Powell, after Bloomberg reported the Trump administration had looked into doing so in February.
“I’m not going to comment,” President Trump’s chief economic adviser Larry Kudlow said. “It happened six months ago, and it’s not happening today, and therefore I have nothing to say about it.”
Kudlow declined to comment on whether the White House had ever considered demoting Powell.
“We are not taking actions to change his status,” he said.
In December, Bloomberg reported that Trump was considering firing Powell after policymakers at the U.S. central bank voted to increase interest rates for the fourth time that year.
It’s unclear whether Trump has the power to fire a Fed chair. According to the law, the president can fire a Fed governor (for a cause) but it hasn’t been tested on the firing of a chair. Because the chair is considered to be a governor, it’s likely that it is legal.
Advisers, however, have reportedly warned Trump that firing Powell would rock the already volatile markets — which is likely what he hopes to avoid by replacing the chair.
Trump has launched a series of attacks against Powell, whom he hand-picked more than a year ago to replace Janet Yellen. Trump blames the Fed for curtailing economic growth by raising interest rates, and has said the stock market would be “10,000 points higher” if policymakers hadn’t raised rates in December.
Most economists anticipate the U.S. central bank will keep the benchmark federal funds rate at 2.25 percent to 2.5 percent during their two-day meeting this week, while also paving the way for a rate cut in July.
FOX Business’ Blake Burman contributed to this report.