President Trump’s belittling of the Federal Reserve and its chairman, Jerome Powell, has become an ‘elephant in the room’ for U.S. economic policy, Rep. Maxine Waters said Wednesday, urging the central bank not to give in to high-pressure tactics from the White House.
Trump has repeatedly criticized the central bank for raising interest rates seven times since he took office and complained bitterly when it didn’t reduce them amid fallout from his trade war with an array of U.S. trading partners and competitors.
“This president has made clear that he has no understanding of or respect for the independence of the Federal Reserve,” Waters, the chairman of the House Financial Services Committee, said during a hearing called for the Fed chief’s semiannual testimony on the state of the U.S. economy. “According to media reports, he has discussed firing Chairman Powell, just as he has fired others he doesn’t agree with.”
Powell has said previously that the law allowing his dismissal only for cause, a term generally interpreted to mean misconduct, is clear and that he plans to serve his full four-year term. The statute creating the Fed in the early 20th century was designed to allow the central bank to foster stable economic growth without being swayed by political pressure, and many presidents have avoided publicly trying to influence its decisions.
Powell, however, has been the brunt of harsh criticism from Trump, who chose him to succeed Janet Yellen. Told that he lacked the power to fire Powell without cause, Trump has instead subjected the central bank to an ongoing tongue-lashing, while praising European Central Bank President Mario Draghi’s willingness to stimulate the trading bloc’s economy.
“I want to be given a level playing field,” the president told reporters in June. “And so far, I haven’t been.” Since then, Trump has said the Fed “doesn’t have a clue,” and if it did, it would cut rates from the current range of 2.25% to 2.5%.
The central bank has indicated a growing willingness to do that since June, citing low inflation, global trade tensions, and potential fallout from Great Britain’s thorny departure from the European Union, but at least one Democrat questioned that direction.
“This administration is very publicly trying to force financial markets and the Federal Reserve to lower interest rates to offset what I think to be an irrational trade war and poor fiscal policies,” said Rep. Emmanuel Cleaver, a Missouri Democrat and chairman of the monetary policy subcommittee. Cleaver has served on the financial services panel nearly 15 years.
In that time, “I have never seen a president meddle in the Federal Reserve as this president has, and it is deeply disturbing,” he said. “The problem is it seems to be working, because we’re moving in a direction that he has been ordering.”
