President Donald Trump renewed his attack on the Federal Reserve, saying the central bank “doesn’t have a clue,” and may be sizing up his two latest picks for Fed governor as successors to Chairman Jerome Powell.
The fresh criticism is consistent with ideas that the president is laying the groundwork to replace Powell when the chairman’s term is up in 2022, assuming Trump is re-elected, or will attempt to do so earlier if the Fed doesn’t bend quickly enough to his will.
“Our most difficult problem is not our competitors, it is the Federal Reserve,” Trump said in a Twitter post late Friday. The Fed had “raised rates too soon, too often” and “doesn’t have a clue,” he said. Trump has repeatedly accused Powell of not doing enough to bolster the economy.
Trump this week nominated economists Judy Shelton and Christopher Waller to seats on the Fed’s board of governors. While their backgrounds are divergent, both are thought likely to enthusiastically support ..
Trump discussed firing Powell in late 2018 and asked White House lawyers earlier this year to explore options for removing him as Fed chairman, according to people familiar. Last month Trump denied in an interview that he’d threatened to demote Powell back to a board governor -- Powell’s term on the board runs until 2028 -- but said he’d “be able to do that if I wanted.”
Powell has said that he intends to serve his full four-year term at the helm of the Fed and that “the law is clear” on that issue.
The Federal Reserve Act says governors may be “removed for cause” by the president, which generally has been taken to mean inefficiency, neglect of duty or malfeasance -- not merely setting policy that displeases the commander-in-chief. Trump’s regular assertions of policy missteps may be a way to build a case for neglect of duty.
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