President Donald Trump is adamantly opposed to the Federal Reserve’s rate hike campaign, but has never suggested firing Fed Chairman Jerome Powell, Treasury Secretary Steven Mnuchin said on Saturday, moving to defuse a controversy that could roil global markets even further.
Late Friday, Bloomberg News, citing four unnamed sources, reported that Trump has discussed firing the central bank head. With the Fed embarked on a campaign to tighten monetary policy, the president has repeatedly attacked Powell, reportedly fearful that a volatile market – and the attendant possibility of an economic downturn – could endanger his reelection prospects.
The president is notorious for launching broadsides over policy disagreements, and venting his frustrations among White House staffers. Via Twitter, Mnuchin said he recently discussed Fed policy with the president, who said monetary tightening was an “absolute[ly] terrible” thing to do with the economy growing.
Mnuchin, however, quoted a denial by Trump that he intended to axe Powell, a man who he appointed barely a year ago.
Mnuchin tweet
Earlier in the day, White House Press Secretary Sarah Huckabee Sanders also stated that there were no plans to dispatch the Fed Chair.
Mnuchin tweet2
The Dow Jones Industrial Average dropped 7 percent this week, its worst week in 10 years, on fears the Fed is unnecessarily slowing the economy as the central bank on Wednesday raised its benchmark interest rate for a fourth time this year. The Dow, which Trump cheered when it was at record highs earlier this year, is now down 9 percent in 2018.
Until Trump took office, presidents were historically circumspect about criticizing Federal Reserve policy, eager to preserve the central bank’s independence even if they disagreed with its moves. Yet the current president has politicized the Fed’s decisions with alacrity, leaving many in the investor class alarmed by the latest developments.
Markets have been extremely volatile in the wake of the Fed’s tightening campaign, with Wall Street fearful that the central bank could be committing a policy error similar to the year 2000, when a Fed rate hike was partly blamed for tipping the economy as the dotcom bubble burst.
However, Wall Street analysts on Saturday roundly criticized the idea that Powell should be fired, especially during a precarious time for global markets and the U.S. economy.
–CNBC’s John Melloy contributed to this report.
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