Trump likely to allow Fed chairman to serve out remainder of term, adviser says

Washington
CNN
—

President-elect Donald Trump is likely to allow Federal Reserve Chairman Jerome Powell to serve out the remainder of his term, which expires in May 2026, according to a senior Trump adviser who requested anonymity to describe private conversations.

The adviser warned that Trump could always change his mind, but his current view — and that of Trump’s economic team — is that Powell should remain at the top of the central bank while it pursues its policy of lowering interest rates. Trump in July told Bloomberg that he had intended to retain Powell in his role at least during his term.

Still, Powell was peppered with questions about his job security during his first post-election news conference Thursday. Powell issued a curt “No” in response to a question about whether he would leave his Fed post before his term ends if President-elect Donald Trump asked him to. Powell later clarified that he believes Trump cannot fire him.

“Not allowed under the law,” Powell said.

Trump appointed Powell, a Republican former private equity executive who sat on the central bank’s board, to its top spot in 2018.

President Joe Biden reappointed him to a second four-year term.

Gary Cohn, the Goldman Sachs alum who served as economic policy director during Trump’s first administration, is said to want the job, but former Trump officials have said the fact that Cohn resigned in protest over Trump’s steel tariffs makes very unlikely that he would get it. the.

Among the names cited by sources in connection with the Trump transition are Kevin Warsh, who served on the bank’s board for five years and advised Trump during his first term; as well as Trump’s former chief economist Kevin Hassett.

In July, before Trump was elected, the Fed chairman was asked if he intended to serve out the rest of his term, and he said unequivocally “Yes.”

Trump has often vented frustrations with Powell and occasionally threatened to remove the Fed chair from his post, something no president has ever done.

Trump has also criticized what he sees as a lack of transparency from the Fed, which conducts its policy deliberations in private and releases the notes from those discussions weeks later. CNN has reported that Trump’s aides have suggested that he would like the real-time release of those minutes and financial reports and that the meetings be conducted on camera.

Trump and Powell clashed several times during his first term, with the president-elect threatening to fire him from office on several occasions.

In 2018, Trump said he was considering replacing Powell with a new Fed chair after the central bank raised interest rates. However, a president cannot easily remove a Fed chair once confirmed unless they break the law.

After markets stalled at the onset of the pandemic in March 2020, Trump told reporters he had “the right to remove (Powell) as chairman,” adding that “he’s made a lot of bad decisions so far, in my opinion.”

Recently, Trump also said that the Fed chair is among the easiest jobs in government. “You show up at the office once a month and you say, ‘Let’s flip a coin,’ and everybody talks about you like you’re a god,” Trump said last month at an event hosted by the Economic Club of Chicago.

Trump also said his earlier threats to remove Powell “because he kept interest rates too high” caused the Fed chair to cut rates “too much.”

While the Fed chairman has the most influence at Federal Open Market Committee meetings, they are not the only officials who decide where interest rates should be. At each monetary policy meeting, there are 11 other Fed officials who vote on interest rate moves.