Powell Says He Wouldn’t Resign at Trump’s Request
(Bloomberg) -- Federal Reserve Chairman Jerome Powell said he wouldn’t resign if President Donald Trump asked him to do so, addressing months of criticism from the White House about the central bank’s decisions to raise interest rates.
Trump has repeatedly criticized the Federal Reserve interest rate increases under Powell and last month privately discussed firing Powell following the central bank’s most recent rate hike. Trump’s acting chief of staff, Mick Mulvaney, later said that the president knows “now” that he cannot fire the Fed chair unless it’s for cause.
Powell, speaking Friday at an American Economic Association meeting in Atlanta, deflected a question about whether he would meet with Trump, something the White House said both Powell and Trump want to do.
“Meetings between presidents and Fed chairs do happen,” Powell said. “Nothing has been scheduled, and I don’t really have anything to report on that.”
Trump’s top economic adviser, Larry Kudlow, said earlier Friday that “both sides” want the president and Powell to meet over their differences on the central bank’s rate increases.
“The details have not been worked through yet,” Kudlow told Bloomberg TV on Friday. “I can’t really predict a meeting although I think one will happen.”
“It would be nice to have a frank and a candid exchange up close and personal,” Kudlow added. “President Trump would benefit. I think Jay Powell would benefit.”
Powell, however, signaled a meeting would be unlikely to change anything at the Fed.
“I would want the public to be assured that we have a strong culture,” Powell said Friday. “It’s not a fragile one. It’s not subject to disruption."
Still, Janet Yellen, Powell’s predecessor, warned Trump’s repeated attacks on Powell and the Fed could undermine confidence in the central bank.
“Obviously the president has a right to comment on the Fed, but I would worry that if it continues, or intensifies, that it could undermine confidence in the Fed,” said Yellen, who appeared on a panel with Powell at the Atlanta meeting.
Kudlow argued the Fed is overly concerned about inflation at the risk of stunting economic growth. He said a “supply-side revolution” is allowing the U.S. economy to grow without raising the threat of inflation.
“There is no inflation. More growth, more people working does not cause inflation,” Kudlow said. “These old Federal Reserve models are outdated and have proven to be incorrect. ”
While Trump has broken with a long-held tradition of a sitting president refraining from publicly commenting on monetary policy, he is not the only one to criticize Powell. Investors are frustrated with the Fed chair’s choice not to be more transparent about what kind of data the central bank is dependent on to make rate decisions. Investors are increasingly saying that the Fed could use speeches and press conferences to do a better job of explaining their decisions.
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