With his escalating rhetoric against Federal Reserve chair Jerome Powell, President Donald Trump is approaching an economic boundary that few presidents previously considered crossing.
On Thursday, Trump said Powell’s “termination cannot come fast enough.” His chief economic advisor, Kevin Hassett, also informed reporters that the White House was exploring the possibility of dismissing the Fed chair.
In a report published Tuesday, Axios noted the president’s actions could threaten the independence of the Federal Reserve, a situation that has already unsettled investors and led to a decline in the stock market. Trump could steer the global financial system into a crisis if he chooses to “cross this red line,” per the Axios reporters. ALSO READ: Trump’s ‘showdown’ with the Fed is bad news for anyone with a 401k — here’s why: economist
On Monday, Trump called Powell a “major loser,” demanding him to cut interest rates “NOW,” in a post on Truth Social.
Interest rates are central to Trump’s criticism of Powell’s performance. The president believes the Fed should work to lower borrowing costs for both consumers and businesses. Since its last rate cut in December, the Fed has kept its benchmark rate unchanged because inflation has proven persistent, complicating the bank’s attempts to align price growth with its 2 percent annual target.
Trump has highlighted the Fed’s hesitance in reducing rates compared to the European Central Bank, which lowered its benchmark rate by a quarter of a percentage point on April 17.
But there is at least one GOP member of Congress who is defending the independence of the Fed against the president’s attacks.The Axios report quoted a Republican head of the House’s Fed task force as saying that it was vital for Congress to safeguard the central bank’s independence. “I don’t know that we need any extra excitement in the markets right now,” Rep. Frank Lucas (R-OK.) told Axios.
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Earlier, Lucas said the task force has addressed the importance of Fed independence and building “the walls higher and stronger and taller.”
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