President-elect Trump Indicates No Plans to Oust Federal Reserve Chair
Trump Declines to Remove Powell
In an interview broadcast on NBC News’ “Meet the Press with Kristen Welker,” U.S. President-elect Donald Trump stated he has no intention of replacing Federal Reserve Chair Jerome Powell upon taking office in January. Powell’s current term extends until 2026.
When asked about Powell’s future, Trump responded, “No, I don’t think so. I don’t see it.” While Trump acknowledged his previous disagreements with Powell over interest rate policies, he did not indicate any immediate plans to push for a leadership change at the Fed.
Trump Acknowledges Potential Tensions
Despite downplaying the likelihood of removing Powell, Trump alluded to the challenges that could arise from their past clashes. “I think if I told him to [leave], he would. But if I asked him to, he probably wouldn’t,” Trump noted.
During his first term, Trump frequently criticized Powell over interest rate hikes, which Trump claimed stifled economic growth. He also opposed Powell’s response to the COVID-19 pandemic, arguing that his decisions had been detrimental to the U.S. economy.
Powell’s Legal Independence
Jerome Powell has maintained that his role as Fed Chair is protected under U.S. law. In remarks made last month, Powell emphasized that a president does not have the legal authority to remove a Federal Reserve Chair before the end of their term.
Trump’s previous administration saw significant friction with Powell, particularly in late 2018 when Trump privately discussed removing him after a series of interest rate hikes. Despite the tension, Powell continued to uphold the Fed’s independence, resisting political interference.
Historical Perspective on Fed Independence
Trump’s vocal criticism of the Federal Reserve during his first term marked a departure from the traditional presidential approach. Historically, U.S. presidents have avoided direct critiques of the central bank, respecting its legal independence. Trump, however, argued that he should have greater influence over the Fed’s monetary policies.
Earlier this year, Trump reiterated his view that the Fed’s decisions should align more closely with the administration’s economic objectives, raising questions about the future of the institution’s autonomy.
Anticipation of Rate Cuts
As Trump prepares to take office, traders anticipate that the Federal Reserve will announce an interest rate cut during its December 17-18 policy meeting. A potential reduction of 0.25% would lower the policy rate to the range of 4.25%-4.50%.
This move follows recent indications of a cooling U.S. labor market. If implemented, the rate cut would mark a significant policy shift aimed at supporting economic stability amid global uncertainties.