Report: Trump considered firing Federal Reserve chairman Jerome Powell over interest rate hikes

A hallmark of the first year and a half of President Donald Trump’s tenure in office was a rip-roaring U.S. economy and a skyrocketing stock market, created in part by the Trump administration’s heavy deregulations and GOP-led tax cuts. But with the stock market losing much of its prior gains over the last several months, many pundits have expressed concern over a possible looming recession — and in Trump’s view, there’s one person to blame.

According to a report from Bloomberg, Trump has considered firing Federal Reserve Chairman Jerome Powell, who has hiked interest rates four times just this year, each time sending a shock through the markets that precipitated a massive sell-off and downturn.

Fire the Fed chairman?

Historically, the Fed has used interest rate hikes as a sort of brake on monetary inflation, a phenomenon that tends to coincide with a growing economy.

Rising interest rates make borrowing more expensive, making investors wary and slowing the growth of businesses and the economy as a whole in hopes of curbing inflation — but there were few, if any, signs of inflation, and Powell still repeatedly raised the rates.

This has led Trump to distrust the Fed’s chairman, according to Bloomberg. Citing four unnamed sources said to be “familiar with the matter,” the media outlet reported that the president has been discussing the prospect of firing Powell out of frustration over the stumbling block his interest rate hikes have posed to the economy.

Advisers have reportedly cautioned Trump against doing so.

The White House has not issued a statement in response to the report.

Ambiguous legality

If Trump chooses to fire Powell, the move would undoubtedly send shockwaves of uncertainty through the markets and undermine confidence in the Federal Reserve’s ability to oversee the economy.

That said, and despite speculation, it is unclear if Trump even has a clear legal path to fire the Fed chairman. The Federal Reserve Act allows for governors of the independent entity to be “removed for cause by the president,” and while Chairman Powell is also a governor of the Fed and presumably covered by that legal authority, there is some ambiguity in the law as it pertains to the Fed’s leader.

Moreover, Bloomberg reported that it the Fed’s chairman has never been removed by the president before.

Firing Powell would also be widely viewed as a challenge to the Federal Reserve’s longstanding independence. The central bank, which sets overarching monetary policies, is generally regarded as nonpartisan and independent from the more short-term economic whims of elected politicians in Washington.

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Still, President Trump has every right to be furious with the Federal Reserve chairman over his repeated interest rate hikes, which have slowed the explosive growth of the U.S. economy — indeed, his frustration is shared by many who want to see what sort of heights the growing economy can ultimately reach.

However, it is highly unlikely that Trump will actually fire Powell — if he is even legally able to do so — and much more likely that he will simply have to account for the economy-slowing actions of the Fed as he continues his bid to make America great.

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