US President says he will act against the Fed if replacement is not approved soon, promises rate cuts
U.S. President Donald Trump escalated his public pressure campaign against Federal Reserve leadership this week, threatening to remove Chair Jerome Powell from his governor role once a new chair is confirmed — a development Canadian financial advisors should monitor closely given the potential implications for North American monetary policy and cross-border capital flows.
Speaking on Fox Business and reported by CNBC, Trump made clear his frustration with Powell has not subsided despite the chair's term expiring May 15.
"Then I'll have to fire him," Trump said. "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. I want to be uncontroversial."
Trump has tapped former Fed Governor Kevin Warsh as Powell's replacement. While the transition of the chair role itself appears straightforward, Powell retains two years remaining on his term as a Fed governor, and has consistently declined to clarify whether he intends to vacate that seat once Warsh is installed.
The succession picture has grown more complicated by a separate legal matter. A federal investigation into a costly renovation of the Fed's Washington headquarters has created friction on Capitol Hill. The U.S. attorney for the District of Columbia, Jeanine Pirro, attempted to subpoena Powell for documents related to the project but was turned back by a judge, a ruling she has said she intends to appeal, according to CNBC.
Adding another layer, Senator Thom Tillis of North Carolina has indicated he will hold Warsh's nomination in the Senate Banking Committee until the renovation probe concludes. Powell, for his part, has said he will remain chair until a confirmed successor is in place, in keeping with established Fed practice.
Trump showed no signs of backing away from scrutiny of the construction project.
"What they've done to that, it is probably corrupt, but what it really is is incompetent, and we have to show the incompetence of that," he said.
The renewed pressure on Powell is part of a broader pattern of White House friction with the central bank's leadership. As reported by CNBC, Trump previously sought to oust Fed Governor Lisa Cook over allegations related to mortgage irregularities. That effort has so far been unsuccessful, with the matter now before the U.S. Supreme Court and a ruling still pending.
The president also reiterated his push for rate reductions and expressed confidence that Warsh would deliver on that front once confirmed.
