Embattled Federal Reserve Chair Jerome H. Powell’s job is safe — for now.
President Trump’s top economic adviser was asked Tuesday whether Powell’s position is protected.
“There is no effort to remove him. I will say that unequivocally at the present time. Yes, he’s safe,” Larry Kudlow said at a CNBC Capital Exchange event. “To be very clear, there are no plans presently to change Mr. Powell’s job or any of that sort of thing.”
Trump has been saying for months that the Fed should cut interest rates, a move that probably would boost the economy and the stock market ahead of the 2020 election. Powell has not done that, and the president has gone as far as suggesting he might remove Powell as Fed chair. But White House officials continue to say there are no immediate plans to act.
The Fed is supposed to be independent of politics, meaning its leaders should make the best decisions for the U.S. economy in the long term, not what’s ideal for short-term political wins. Fed chairs are nominated by the president and confirmed by the Senate for four-year terms. Trump handpicked Powell for the job but has since expressed some regret about his choice.
Powell has been adamant that he does not believe he can be removed from his position before his term expires in 2022, but Trump has suggested there may be a legal loophole in which he can demote Powell to being one of the Fed governors.
Kudlow defended the president’s criticism of the Fed, arguing that it was good advice. Unemployment is at a half-century low, but it does not appear to be triggering inflation, Kudlow said, so interest rates could be lower.
"The Fed should be independent, but that word ‘independent’ — I mean, it doesn’t mean they operate from another planet,” Kudlow said. “That doesn’t mean that they shouldn’t listen to advice from their elders.”
Trump recently said he plans to nominate conservative scholar Judy Shelton and economist Christopher Waller to fill the last two remaining spots on the Fed’s seven-person board. Both Shelton and Waller support lowering interest rates.
Kudlow said there is “no shortage of candidates” to fill Fed positions, although Trump’s last four nominees have failed to get past the Republican-controlled Senate.
Powell is set to testify Wednesday before the House Financial Services Committee and Thursday before the Senate Banking Committee. The U.S. economy looks healthy, but the Fed is widely expected to reduce interest rates from the current level of 2.35 percent to 2.1 percent later this month in an effort to stimulate the economy and counterbalance Trump’s trade war and weak growth overseas.