President Donald Trump appeared late Tuesday to lower the temperature following days of attacks against Federal Reserve Chair Jerome Powell, saying he wouldn’t seek to oust the central bank chief.
“I have no intention of firing him,” Trump told reporters in the Oval Office.
Stock futures rallied following Trump’s comments, with the Dow Jones Industrial Average up almost 400 points, or 1%, late Tuesday. S&P 500 futures jumped 1.3% and Nasdaq futures added almost 1.5%.
Trump’s withering attacks against Powell in recent days, as he pressures the Fed to lower interest rates, have sent markets reeling over fears that the central bank’s independence could be under threat.
The president last week called Powell “always too late and wrong” and said his “termination cannot come fast enough!” And just Monday, Trump called Powell “a major loser” and “Mr. Too Late” for not lowering interest rates. That broadside helped send the Dow plummeting 1,000 points on the day.
Presidents nominate a Fed chair for a four-year term. Trump nominated Powell, then a Fed governor, as chair in 2017. President Joe Biden then renominated Powell, and he was confirmed by Congress on May 12, 2022. That means Powell can serve in his post until May 12, 2026.
Trump’s top economic adviser said last week that aides were studying the possibility of firing Powell.
But the Federal Reserve Act of 1913 states that Fed governors can only be removed by the president before the expiration of their terms “for cause,” defined as “inefficiency, neglect of duty, or malfeasance in office.” In a landmark 1935 case, Humphrey’s Executor v. United States, the Supreme Court ruled that President Franklin Delano Roosevelt couldn’t fire a member of the Federal Trade Commission due to policy disagreements.
While Trump might claim cause if he did try to fire Powell, there would surely be a protracted court battle.
After the November election, Powell said he plans to serve out his term and that wouldn’t step down — even if the president asked him to. Powell emphasized that it’s unlawful for presidents to fire or demote the Fed chair.
Trump stepped up his attacks after Powell said last week that he expects the president’s tariffs to fuel further inflation.
“Tariffs are highly likely to generate at least a temporary rise in inflation,” Powell said last Wednesday at the Economic Club of Chicago. “The inflationary effects could also be more persistent. Avoiding that outcome will depend on the size of the effects, on how long it takes for them to pass through fully to prices, and, ultimately, on keeping longer-term inflation expectations well-anchored.”
—Catherine Arnst contributed to this article.
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