Trump Would Keep Powell if Elected

In a recent interview with Bloomberg Businessweek, former President Donald Trump indicated that he would allow Federal Reserve Chair Jerome Powell to complete his term if he wins the upcoming November election. Trump stated, "I would let him serve it out, especially if I thought he was doing the right thing," marking a significant shift from his previous criticisms of Powell. Powell, who was nominated by President Joe Biden for a second term in May 2022, has been a contentious figure for Trump, who has openly criticized the Fed's interest rate policies during his presidency. Trump's relationship with Powell has been fraught since the latter took over as Fed chief in February 2018. The former president has previously expressed dissatisfaction with Powell's decisions, particularly regarding interest rate hikes, which he argued placed the U.S. at an economic disadvantage. In a February interview, Trump even suggested he would not reappoint Powell, accusing him of political motivations that could benefit Democrats. Despite his earlier criticisms, Trump's recent comments suggest a willingness to maintain continuity at the Fed, contingent on Powell's performance. However, the legal framework surrounding the dismissal of Fed officials complicates the matter. While a sitting president can technically fire a Fed official, it must be for "cause," not merely policy disagreements, as established by law. The potential for a legal battle over the president's authority to dismiss a Fed chair could arise, echoing historical precedents. Ultimately, the president's influence over the Fed is limited to appointments, which require Senate approval, underscoring the central bank's independence from direct presidential control.