Feb 2, 2024 - Politics & Policy

Trump says he won't reappoint "political" Powell as Fed chair if re-elected

Trump and Federal Reserve Chair Jerome Powell at the White House in November 2017.

Trump and Federal Reserve Chair Jerome Powell at the White House in November 2017. Photo: Andrew Harrer/Bloomberg via Getty Images

Former President Trump told Fox Business on Friday that if re-elected in November, he would not reappoint Jerome Powell to a third term as chair of the U.S. Federal Reserve.

Why it matters: Trump, the Republican presidential frontrunner, has a checkered relationship with Powell, routinely criticizing the central bank on its rate decisions while in the White House.

  • The Federal Reserve was designed to be independent from politics, so presidents typically don't seek to influence its decisions — at least not as overtly as Trump has in the past.
  • Powell has said Trump's criticisms did not influence the Fed's interest rate decisions, though there were concerns that they had.

Driving the news: The Fed announced Wednesday it would keep interest rates steady until it's more confident that inflation has been curbed.

  • But Powell also said that if the economy continues to evolve as the central bank expects it to, it could begin cutting rates later this year.

What they're saying: Trump said Friday — without evidence — that he wouldn't reappoint Powell because he believes the Fed chair is "going to do something to probably help the Democrats," such as lower interest rates.

  • "It looks to me like he's trying to lower interest rates for the sake of maybe getting people elected," Trump said during an interview with Fox Business' "Mornings with Maria," adding that he believes Powell is "political."

Flashback: Trump first nominated Powell to serve as Fed chair in 2017, but has since soured on him.

  • Powell was sworn in for a second four-year term on May 2022, meaning he would be at the helm of the Fed for roughly a year of the next administration.
  • That's unless Trump wins and attempts to fire Powell, which may be allowed by the the Federal Reserve Act of 1913, but would be unprecedented — and likely end up in court.

Between the lines: The Fed has hinted at potential interest rate cuts in the months ahead after aggressively raising them over the past two years in response to record-high inflation.

Of note: Asked Wednesday about Republican criticism of him and whether he would want to be reappointed, Powell said he wasn't focused on a potential third term.

  • "I'm focused on doing our jobs," he said at a press conference after the Fed held rates steady. "This year is going to be a highly consequential year for the Fed and for monetary policy, and we're, all of us, very buckled down and focused on doing our jobs."

Thought bubble, via Axios' David Lindsey, managing editor for politics: The refusal to reappoint Powell fits into Trump's pattern of openly wishing for the economy to not improve because it might favor Biden — and with Trump discouraging Republicans in Congress from doing anything to improve the border situation for the same reason.

  • Trump has made clear he's fine with Americans feeling some pain as long as it helps his campaign.

Go deeper: One major reason the Fed is hesitant to cut rates

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