WASHINGTON – President Donald Trump on Wednesday threatened to fire Federal Reserve Chair Jerome Powell from his separate seat on the U.S. central bank’s Board of Governors if Powell does not vacate that post as well when his term as Fed chief ends on May 15, intensifying a complicated standoff that has upended the Fed’s usually smooth transition of power.
Trump administration threats against Powell, including an ongoing criminal investigation, could delay Senate confirmation of Kevin Warsh as Trump’s nominee to succeed Powell as Fed chief, but the president in a Fox Business interview doubled down on the probe as a way to prove Powell’s “incompetence” and said if he doesn’t leave altogether, “then I’ll have to fire him.”
“You want Jay Powell out of the way?” the president was asked by Fox Business host Maria Bartiromo.
“If he’s not leaving on time – I’ve held back firing him, I’ve wanted to fire him, but I hate to be controversial, you know. I want to be uncontroversial, but he will be fired,” Trump responded. He gave no indication that U.S. Attorney for the District of Columbia Jeanine Pirro would back down from investigating a Fed building project the administration has criticized for cost overruns.
Trump’s language underscored the stakes, and the potential complications the administration faces if Powell doesn’t leave the seven-member Fed board.
With greater control of seats on the board, Warsh would have a freer hand in setting monetary policy and making other changes at the central bank that the administration might seek. Trump has appointed only three of the current members, and one of them, Fed Governor Stephen Miran, is in a seat whose term has already expired and, as it stands, would have to be vacated for Warsh to join.
PROBE COMPLICATES WARSH CONFIRMATION PROCESS
Three of the Fed’s seven governors were appointed by former President Joe Biden; Powell was promoted to the top central bank job by Trump, but has proved himself independent of the president’s pressure and threats; and even Trump appointees like Fed Governor Christopher Waller are considered unlikely to support radical change or even abide by Trump’s advice on interest rates.
As a consequence, administration efforts to clear room on the board, such as through a move to fire Fed Governor Lisa Cook, a case that is pending in the U.S. Supreme Court, have become all the more urgent in the discussion of the Fed’s standing as an independent central bank able to set rates free of political influence.
The status of the Pirro investigation, involving whether Powell made misstatements to Congress about the project at the Fed’s headquarters in Washington, D.C., is unclear. Pirro was rebuffed by a federal judge who said grand jury subpoenas were not warranted, but has not yet followed through on a promised appeal. Investigators from her office made an unannounced visit to the building site on Tuesday, where they were told to ask for an appointment.
Both Trump and Pirro have said the building investigation needs to be pursued regardless of how it affects Warsh’s confirmation process. Senator Thom Tillis, a Republican member of the Senate Banking Committee, has said he regards the probe as a frivolous assault on the Fed’s independence and will block Warsh’s confirmation until it is dismissed.
Warsh, who Trump has said he trusts to deliver interest rate cuts that Powell and other Fed officials feel would be unwise, given that inflation is running above the central bank’s 2% target, has a hearing before the committee on April 21.
Trump has been angry with Powell since shortly after appointing him to the Fed chief position during his first term in the White House. The Pirro investigation, however, has stiffened Powell’s attitude toward remaining in a Fed governor’s seat that extends to 2028, the last full year of Trump’s presidency. Fed chiefs traditionally depart the board as well when their leadership terms end.
In a press conference after the end of the Fed’s March 17-18 policy meeting, Powell said he had “no intention of leaving the board until the investigation is well and truly over, with transparency and finality,” and might remain even beyond that “based on what I think is best for the institution and for the people we serve.”
Reporting by Howard Schneider, Susan Heavey, Doina Chiacu and Paul Simao; Editing by Andrew Heavens and Paul Simao, Reuters
