CNN
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President Donald Trump said Wednesday it’s “highly unlikely” that he’ll fire Federal Reserve Chair Jerome Powell after signaling otherwise a day earlier in a private meeting with lawmakers.
The mixed messages come as the administration has sought to build maximum pressure on the chair, whom Trump would very much like out of his job, even if he’s reluctant to decree his termination.
When asked if he has completely ruled out firing Powell, Trump told reporters in the Oval Office that he never rules anything out but it was “highly unlikely.”
But he offered an important caveat: “Unless he has to leave for fraud.”
Behind closed doors, the president has seemed more intent on axing the chair, who’s been a frequent target of his ire, particularly for not lowering interest rates fast enough.
In a meeting with lawmakers on Tuesday, Trump polled them about whether he should fire Powell, a senior White House official told CNN. And he told them that he was going to fire him – maybe Wednesday – pointing to the $2.5 billion renovation plan at the Federal Reserve building, which he claimed he was not happy about, according to a source briefed on the president’s remarks in the meeting.
He even gestured toward a document he said was a letter firing Powell, according to a person in the room.
Another person familiar with the meeting said Trump appeared intent on getting rid of Powell and was enthused by the reception from the lawmakers who were encouraging him to fire the chair.
Trump confirmed to reporters on Wednesday that he’d asked lawmakers about the “concept” of firing Powell, saying the ones he asked were largely in favor. But he called reports that he planned to fire Powell “not true.”
Trump on Tuesday evening had suggested the building renovation plan might be sufficient cause to fire Powell — an escalation of his criticism of the Fed chair.
But multiple sources said that it was unclear that anything was imminent in terms of firing. Trump has often made threats behind closed doors that he intends to fire individuals, including Powell.
“He’s just toying with the idea right now,” another White House official noted.
There could be a revolt in global markets, including a possible collapse in the dollar and US bonds, if Trump were to take the unprecedented step of removing Powell. On Wednesday morning, the US dollar index — which measures the dollar’s strength against six major foreign currencies — dropped as much as 0.8% after reports the president was moving closer in that direction. But after Trump’s Oval Office remarks, the dollar index pared its losses and was down just 0.3% as of midday.
On Wednesday afternoon, some GOP senators expressed concern about the effects on the stock market if Trump were to fire Powell — and they defended the Fed’s independence.
“If you fire the chairman of the Federal Reserve, you will see the stock market crash, and you will see the bond market crash,” Louisiana Sen. John Kennedy said.
“If Powell unilaterally cut interest rates, 300 basis points, 3% right now, you would see … the bond market go into a fit, you would see interest rates rise dramatically, and it would have a huge impact on us borrowing money to fund the government.”
Sen. Thom Tillis of North Carolina similarly said it would be a “colossal mistake” for Trump to fire Powell because it would send a “shock wave” around the world about the central bank’s independence.
“So anybody out there in voter land who thinks that firing Jay Powell will change the policy outcomes for dual mandate — I don’t think it will,” he said, referring to the congressional requirement that the Fed both maximize employment and stabilize prices.
“What it will do is send a shock wave through the markets about maybe there is a real threat to the independence of the Fed, and I think that will create second and third order effects that none of us who track markets want to see,” said Tillis, who serves on the Finance and Banking committees.
As CNN reported last week, White House advisers have been engaged in a coordinated effort to dramatically ramp up the pressure on Powell in public statements and through bureaucratic moves designed to give Trump more leverage.
But that leverage, sources said, hasn’t been designed to trigger Powell’s removal — at least not yet. Instead, it’s been part of an expanding effort to change Powell’s and the Federal Open Market Committee’s insistence on independence.
Trump upped the pressure himself Tuesday evening when he suggested the building renovation could be cause to fire Powell.
“I think he’s terrible. … But the one thing, I didn’t see him as a guy that needed a palace to live in,” Trump told reporters, likening conversations with Powell to “talking to a chair.”
“But the one thing I would have never guessed is that he would be spending $2.5 billion to build a little extension onto the Fed,” he added.
When a reporter asked if that was a fireable offense, the president replied: “I think it sort of is.”
For those close to Trump, the conversation about how to get rid of Powell, without directly firing him, has been ongoing for months.
Last week, Russell Vought, the director of the Office of Management and Budget (OMB), accused Powell of breaking the law by failing to comply with government oversight regulations and lying to Congress about details of the planned renovation, in a letter Vought posted to social media.
Shortly after the letter was published, CNN reported Trump ousted three members of the National Capital Planning Commission, the federal government’s central planning agency for the region, which would have an oversight role in the renovation project, and replaced them with loyalists: White House staff secretary Will Scharf, deputy chief of staff James Blair and OMB analyst Stuart Levenbach.
Peter Navarro, the senior counselor for trade and manufacturing, wrote an op-ed calling Powell one of the worst Fed chairs in history, and Bill Pulte, head of the Federal Housing Finance Agency, has called on Congress to investigate Powell.
CNN’s Ted Barrett and Nicky Robertson contributed to this report.
This story has been updated with additional information.
