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Why President Trump’s Unhappiness With Jerome Powell Is a Recipe for Disaster
President Trump has been vocal about his discontent with Jerome Powell, the chairman of the Federal Reserve, over multiple issues. While some might find the president’s criticism surprising, given that he nominated Powell in 2017 and praised him initially, it is not unprecedented for presidents to criticize the central bank.
The Federal Reserve, or Fed, plays a crucial role in the US economy. In fact, it is the central bank of the United States. The institution’s primary responsibilities include regulating the banking system, acting as a “lender of last resort” for banks, and managing an instant payment system.
However, one of its most critical roles is setting monetary policy. This decision-making process takes place within the Federal Open Market Committee, where Powell holds significant influence as chair. The committee’s objective is to balance two key goals: maintaining low unemployment rates while keeping inflation at bay. This dual mandate has long been a contentious issue in US economic policy.
For years, Trump has criticized Powell over his handling of interest rates. He believes that the Fed should lower these rates immediately to boost economic growth and make borrowing more affordable for American consumers and businesses. However, this stance contradicts many experts’ warnings that cutting rates too quickly could further fuel inflation and create a bubble in asset markets.
Powell’s performance has been under scrutiny due to his handling of the central bank’s headquarters renovation project. Trump is displeased with the estimated $800 million cost, which he claims is “excessive.” In response, Powell defended himself by stating that the construction project was subject to annual budget approval from Fed board members and ensured the project would be carefully overseen.
In recent weeks, Trump has repeatedly criticized Powell’s actions as chair. Despite this criticism, it remains unclear whether he can legally fire Powell before his term ends. According to federal law, Federal Reserve board members can only be removed by the president for “cause.” Additionally, the Supreme Court ruled in 1935 that Congress is allowed to restrict the grounds on which a president may remove members of independent government agencies like the Fed.
Powell has faced criticism from both sides of the aisle, including Democratic and Republican lawmakers.
Source: www.cbsnews.com
