Federal Reserve Chairman Jerome Powell said on Thursday that he would not step down if President-elect Trump asked him to resign.
When asked if he would resign if Trump asked him, the Fed chairman simply said: “No.” Powell later told reporters that the president did not have the authority to fire or demote him.
After the Fed cut interest rates by a quarter percentage point, Powell told reporters at a press conference that “the law does not allow it.”
Investors will be closely watching the contentious relationship between the president-elect and the chairman of the Federal Reserve. Trump appointed Powell in 2017 but repeatedly lashed out at the central banker during his first term as president for not easing monetary policy fast enough.
Trump said in an October interview that the president should be able to influence interest rate decisions.
On October 15, Trump told Bloomberg News at the Economic Club of Chicago: “I don’t think I should be allowed to order, but I think I have the right to comment on whether interest rates should go up or down.”
In March 2020, as Covid-19 swept the country, Trump claimed the authority to remove Powell. The Fed Chairman’s term ends in 2026.
Powell also said on Thursday that Trump’s election victory this week would not have any direct impact on the central bank’s policy.
“In the short term, the election will not have an impact on our policy decisions,” Powell told reporters.
Republicans also won a majority in the Senate in Tuesday’s election. If Republicans also take the House, Trump should have an easier path to passing his economic agenda.
Former Trump Treasury Secretary Steve Mnuchin said the president-elect is likely to focus on cutting taxes and imposing tariffs, particularly on China.
Powell said the next administration’s policies could have economic consequences that could affect the Fed’s dual mission of full employment and price stability. But Powell said it was too early to draw conclusions and the Fed had not made any assumptions.
“It’s still early days,” Powell said. “We don’t know what these policies are, and once we know what they are, we don’t know when they will be implemented,” he said.
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