Odaily Planet Daily News US President Trump's public criticism of Federal Reserve Chairman Powell has heightened concerns that he is trying to fire the central bank president. However, even with this historic and legally controversial move, Trump may still not be able to get monetary policy in the direction he wants.
Several economists said that even if Powell is fired, Trump may not necessarily get the rate cut he wants. Paul Ashworth, chief North American economist at Capital Economics, pointed out in a recent report: "Firing Powell is likely to be just the first step in dismantling the independence of the Federal Reserve. If Trump is determined to lower interest rates, he must also fire the other six members of the Federal Reserve Board, which will trigger more severe market turmoil, causing the dollar to fall and the long end of the U.S. Treasury yield curve to rise."
Powell is both the chairman of the Federal Reserve Board and the chairman of the Federal Open Market Committee (FOMC), which is responsible for setting interest rate policy. Ashworth pointed out that while members of the FOMC usually choose the chairman of the board appointed by the president to lead them, they can also defy Trump's wishes and choose someone else to head the interest rate-setting committee.
Trump called the Fed chairman a "major loser" in a social media post on Monday that shook financial markets. White House economic adviser Kevin Hassett said last week that the president and his team were exploring the possibility of removing the Fed chairman. However, Trump reversed his tone on Tuesday, saying he would "definitely" fire Powell.