U.S. President Donald Trump has stated he is ready to “fire” Jerome Powell if he does not leave the Federal Reserve soon, escalating pressure just days before the confirmation hearing of Kevin Warsh, his chosen successor.
Powell’s term as Chair of the Fed theoretically ends on May 15. However, Powell has indicated he intends to remain in the position as long as a legal proceeding against him—initiated by a prosecutor close to the President—is ongoing. While his term as Chair may be ending, Powell can technically remain as a Governor until early 2028.
“Well, then I’ll have to fire him. (…) If he doesn’t leave on time,” Donald Trump declared in an interview with Fox Business broadcast today.
The investigation into Powell has been poorly received even within Trump’s own party, with some politicians viewing it as an unjustified attack on the monetary institution’s independence. This has created a deadlock in the Senate regarding the validation of Kevin Warsh.
Read more about this topic: US: Powell rules out leaving Fed until Trump investigation is concluded (with video)
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The Successor: Kevin Warsh, a former Fed Governor (2006-2011), is scheduled for a Senate committee hearing next Tuesday.
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The Hold-up: Republican Senator Thom Tillis, a member of the committee, warned he would not validate Warsh’s appointment until the Public Prosecutor’s Office closes the case against Powell.
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The Accusation: Prosecutor Jeanine Pirro initiated a case following Trump’s public questioning of Powell’s probity, specifically regarding the rising costs of renovating the Fed’s headquarters in Washington.
Trump’s friction with Powell stems largely from interest rate policy. The President has frequently blamed Powell for keeping rates “too high” and has previously referred to him as an “idiot.”
Read more about this topic: Powell warns Fed interest rates could rise more than anticipated
Despite the pressure, Jerome Powell will remain in command of the Fed until a successor is officially confirmed. Experts, such as David Wessel from the Brookings Institution, suggest that if Trump were to pull back the legal pressure, Powell would likely exit as soon as Warsh is confirmed. However, if the fight continues, the Senate may delay the vote for weeks, leaving the leadership of the central bank in limbo during the ongoing IMF and World Bank meetings.
