Trump said Powell is doing a 'bad job' and should be lowering interest rates, according to major media reports. He threatened to fire Powell if he does not resign by May 15. Trump also announced Kevin Warsh as his nominee for Fed chair in January 2025, with a nomination hearing scheduled for April 21.
Senator Thom Tillis said he will block Warsh's nomination until the Department of Justice ends its criminal investigation into Powell over Fed renovations. ' Prosecutors showed up unannounced at the Fed renovation construction site on Tuesday. ' Powell issued a rare rebuke to Trump in January, calling the investigation a 'pretext' connected to the Fed's refusal to lower rates.
How often does the president of a developed country express the view that the interest rate should be set to reduce the debt service cost? This is what you hear in a banana republic.
He delivered his final interest rate decision as chairman but will remain as a rate-setting official. ' He indicated he is waiting for the investigation to be over with finality and transparency, and will leave when appropriate. Powell added that he had 'no choice' but to stay on at the central bank.
The Fed left interest rates on hold at its last meeting. ' She said Trump's approach could lead to inflation getting out of control. Yellen also questioned whether Warsh walks in with the credibility of Alan Greenspan.
I don't think that Warsh walks in with that level of credibility.
SEB economist Elisabeth Kopelman said the Fed's independence is not acutely threatened. However, unknowns remain: whether Warsh will be confirmed given Tillis's threat, whether the DOJ investigation is truly closed or could be reopened, and whether Trump will actually fire Powell if he does not leave by May 15.