In an address to the World Economic Forum in Switzerland, delivered via video link Thursday, President Donald Trump revisited his displeasure with the policy direction of the U.S. Federal Reserve that surfaced during his first term in spite of having appointed the leader of the monetary body.
Trump suggested that high oil prices are contributing to the protracted Russia-Ukraine war and urged Saudi Arabia and OPEC members to bring down the price of petroleum in his address to world leaders gathered in the city of Davos for the conference.
Trump said once oil prices came down he would insist on an interest rate cut by the U.S. central bank, though did not call out the Fed by name.
“I’ll demand that interest rates drop immediately,” Trump said. “And likewise, they should be dropping all over the world. Interest rates should follow us all over.”
During a December interview on NBC’s “Meet the Press,” Trump softened his previous position on Federal Reserve Chairman Jerome Powell, backing off earlier threats to fire the head of the central bank whom Trump appointed to the position in 2018.
When asked by moderator Kristen Welker about whether he has plans to ask or order Powell to step down from his chairmanship, which runs through 2026, Trump said, “I don’t.”
“No, I don’t think so. I don’t see it,” Trump said. “But, I don’t — I think if I told him to, he would. But if I asked him to, he probably wouldn’t. But if I told him to, he would.”
Powell, a Republican and former private equity executive, joined the Federal Reserve in 2012, ascended to the chairmanship in 2018 via Trump’s appointment. President Joe Biden renewed Powell’s term in 2022, which runs through 2026.
Could Trump dump Powell?
While Trump has, at times, pilloried Powell and some of the Fed’s policy decisions, and threatened to fire the current chairman, experts generally agree that the U.S. president does not have the power to order personnel changes at the agency without cause and the courts have previously ruled that a difference of opinion on policy matters does not rise to that level.
Congress established maximum employment and stable prices as the key macroeconomic objectives for the Federal Reserve in its conduct of monetary policy. Federal lawmakers also structured the Fed to ensure that its monetary policy decisions focus on achieving that two-part mission outside the impacts of political pressures. To that end, members of the Fed’s Board of Governors are appointed to staggered 14-year terms, and the board chairperson is appointed to a four-year term. Also, elected officials and members of the president’s administration are not allowed to serve on the board.
Trump has also previously shared the opinion that he should have a say in the Fed’s interest rate decisions, in spite of the body’s congressionally mandated independence.
“I don’t think I should be allowed to order it, but I think I have the right to put in comments as to whether the interest rates should go up or down,” Trump said in an interview with Bloomberg News at the Economic Club of Chicago in October, per NBC News.
While Powell was asked repeatedly at a press conference held the day after the election to weigh in on how the economy and the Fed’s policy stance moving forward would be impacted by Trump’s election victory, the Fed chairman noted no policy changes had yet been made and refused to speculate about potential future actions by the president-elect’s administration.
In response to one reporter’s question during the November press event about whether he would step down from his chairmanship if asked by Trump, Powell responded “no” and later said a sitting president is “not permitted under the law” to order personnel changes at the Fed outside its congressionally dictated process.