President Donald Trump is studying whether he can dismiss Federal Reserve Chair Jerome Powell despite concerns about meddling with the independence of the central bank, an official said on Friday.
Concretely, National Economic Council Director Kevin Hassett said "the president and his team will continue to study that" when asked about the matter. He also suggested that Powell sought to benefit Democrats even though the institution is not political.
"The policy of this Federal Reserve was to raise rates the minute President Trump was elected last time, to say that the supply-side tax cuts that were going to be inflationary," the official said.
He added that Fed officials chose not to go "on TV and at IMF meetings and warn about the terrible inflation from the obvious runaway spending from Joe Biden, and the obvious runaway spending from Joe Biden was textbook inflationary." "And then they cut rates right ahead of the election."
Hasset's statement is the latest instance of Trump's offensive against Powell. He suggested on Thursday he is ready to seek the termination of the nation's most powerful economic policymaker.
Trump took to social media to make his discontent known about Powell, saying the U.S. central bank is lagging behind its European counterpart. The European Central Bank later Thursday morning announced it is cutting interest rates for the seventh time in the past 12 months.
"Jerome Powell of the Fed, who is always TOO LATE AND WRONG, yesterday issued a report which was another, and typical, complete 'mess!'" Trump wrote. "Powell's termination cannot come fast enough!" Powell has said he won't resign, recalling late last year that the removal or demotion of top Fed officials was "not permitted under the law."
The Fed is protected from political prosecution, chiefly as a result of the landmark 1935 Supreme Court case Humphrey's Executor v. United States, in which the court held that the President may not remove an appointee to an independent regulatory agency except for reasons that Congress has provided by law. However, SCOTUS is about to hear a case that could determine the fate of such protection.
Trump has already signed an executive order trying to seize more control over the central bank's responsibilities related to bank regulation. However, the order exempted the Fed's decisions on interest rates, which are voted on at every meeting by the seven members of the central bank's Board of Governors and a rotating set of five presidents from regional reserve banks.
Nevertheless, experts, including Powell, do not expect the court's decision to apply to the Fed, but that the central bank was "monitoring carefully" the situation, he said.
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