Trump pressures Fed again for rate cut... "I have the authority to fire Powell"

[Image source=EPA Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] On the 14th (local time), U.S. President Donald Trump said again that he has the authority to dismiss Jerome Powell, Chair of the Federal Reserve (Fed), criticizing the Fed's response to the novel coronavirus disease (COVID-19) crisis as inadequate.

According to the Washington Post (WP) and others, President Trump said at a White House press briefing that "I hope the Fed ultimately does what they have to do." He urged another interest rate cut, saying that "they (the Fed) need to take preemptive action," just like other central banks of different countries are doing.

Regarding the Fed and Chair Powell's handling of the situation, Trump said, "I am not satisfied," adding, "In my opinion, they are following, not leading. We need to lead." He said, "I have the authority to fire (the Fed Chair). I think he has made countless bad decisions so far," and added, "(I) can send him to a normal position and put someone else in this role."

He also pointed out, "We can very easily refinance our debts at low interest rates," and said, "Right now, we have a tremendous opportunity, but Powell is making it difficult." However, he added, "I have not made any decision yet."

President Trump has been criticizing Chair Powell and pressuring for interest rate cuts whenever he has the chance. Recently, with the U.S. stock market experiencing extreme volatility due to COVID-19, Trump's remarks are expected to pose another risk to investors. Ernie Tedeschi, policy economist at Evercore ISI, told the New York Times (NYT), "If Chair Powell is dismissed, there will be tremendous instability in the market," adding, "The market believes Chair Powell will take action."

The Fed surprised markets on the 3rd by cutting the benchmark interest rate by 0.5 percentage points to 1.00?1.25% to prevent economic slowdown caused by COVID-19. The market expects that an additional rate cut of up to 1.00 percentage point could be implemented at the Federal Open Market Committee (FOMC) regular meeting on the 18th.

This content was produced with the assistance of AI translation services.