President Donald Trump is standing off against himself on an issue that has backfired, according to a political analyst.
Trump has been trying to remove Federal Reserve Chairman Jerome Powell from his post for months over Powell’s insistence that interest rates remain elevated to combat inflation. Trump has repeatedly called for Powell to lower interest rates significantly.
When unable to remove Powell directly by law, the Trump administration launched a criminal investigation into Powell over allegations about the Federal Reserve headquarters renovation.
U.S. Attorney Jeanine Pirro has taken the baton to investigate Powell, but that investigation is currently holding up the nomination process for Kevin Warsh, whom Trump has nominated to succeed Powell when his term ends on May 15.
Speaking with Andrew Egger of The Bulwark, Catherine Rampell suggested that Trump’s desire for change at the Federal Reserve has stalled any change from occurring at the central bank.
Rampell said, “It’s a Mexican standoff in which all of the players are Donald Trump, pointing all of the guns at Donald Trump. The reason why Jerome Powell may stick around longer than he otherwise would is that Donald Trump is investigating him.
“The Fed is supposed to be politically independent; presidents are not supposed to weigh in on Fed policy. Donald Trump did not get the memo. Donald Trump has been pushing for the Federal Reserve to reduce rates basically every time he’s been president. The result is that when the Fed does not listen to him because they don’t think a rate cut is necessarily appropriate for the economy at that point, Donald Trump gets mad.”
Rampell went on to claim the economic change Trump wants from the Federal Reserve is already being practiced in other countries across the globe, and the outcome is the opposite of what Trump could consider a victory.
She said, “This is not just an ‘oh, it’s improper for Donald Trump to be politicizing an independent agency, and it’s unseemly.’ No, we’ve run this experiment many times before and, in fact, are in the middle of running it in places like Turkey. It leads to much higher inflation.
“But this is not something Trump cares about. He just says, ‘Interest rates down now. Don’t do what I want? I’m going to punish you and try to throw you in jail.’”
Egger went on to suggest that the pressure Trump had put on Powell, particularly the criminal investigation, could see the Fed Chair remain in his post for longer, meaning Trump’s plan to oust Powell from his role sooner has backfired.
“On its own terms, this investigation of Powell has failed. The whole predicate for it at the beginning was that this was going to give him an avenue to get him out faster than May 15. That was the whole reason to do any of this in the first place.
“That deadline is basically here, and if anything, the investigation stands to risk the exact opposite happening, of Jerome Powell remaining in the chairmanship longer, and who knows how much longer, than he would otherwise be there. Trump really can’t ever back down from these fights, it’s a macho posturing thing.”
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