Trump has frequently complained about the Fed in public for at least two years, but his latest effort to pressure Mnuchin to privately push for action has not been previously reported.
During that tense Monday meeting in the Oval Office, Trump fumed that Powell never should have been appointed and is damaging the nation and his presidency.
He then told Mnuchin, who had encouraged Trump to nominate Powell in 2017, to engage with the chair and ask him to take more dramatic steps to arrest the stock market’s plummet, according to three White House officials and a senior Republican. The people spoke on the condition of anonymity because they weren’t authorized to reveal the exchange.
Mnuchin has not commented publicly on this meeting, but he has said recently that he is in daily contact with Powell during the coronavirus crisis. Trump initially tried to brush aside concerns about the coronavirus’s impact on the economy, saying it would be short-lived, but the Oval Office meeting struck some of his advisers because it showed how furious he had become.
The stock market has fallen precipitously since mid-February because global supply chains are seizing up, consumers are pulling back sharply on spending, and companies are retrenching as they wait to see what the effects of the coronavirus will be. Interest rates are already very low after an emergency cut by the Fed last week, and they are typically lowered to spur more borrowing and spending. Right now, however, many businesses and consumers aren’t spending money because they don’t know what the future will look like.
Spokesmen for the Treasury Department and White House declined to comment.
Trump’s push to prod Powell came during an Oval Office meeting during which he also suggested to other officials that they call the Fed chair and ask him to consider further interest rate cuts, the officials said.
The senior Republican added that Trump has told several confidants that he wishes he could remove Powell from his post, but he has mentioned the idea only in passing as he voices frustrations and watches the markets slide. The White House officials said they have not heard Trump discuss any concrete plans to fire Powell but acknowledged that the president is looking for ways to challenge him.
Senior aides, worried that the stock market would crater if Trump tried to fire Powell, have discouraged him from attempting this for two years. It’s unclear whether Trump has the legal authority to fire Powell, who has said he plans to serve out his four-year term as chair, which ends in early 2022.
The Federal Reserve Act says that a Fed governor can be removed “for cause,” which courts have interpreted as criminal activity or malfeasance, as in other cases regarding the leaders of independent agencies. But Trump could attempt to de-
designate Powell as the Fed chair and make him one of its governors and then elevate someone else to the top position. It hasn’t been done before, but Trump has shattered numerous other norms since his inauguration.
Trump nominated Powell to lead the Fed in 2017 but has complained about him for more than a year, saying the central bank should lower interest rates to flood the economy with cash.
The Fed moved to lower interest rates slowly last year amid signs of a slowing economy, and it enacted the emergency cut last week as the stock market’s volatility worsened. That move has done little to assure investors that the economy will be able to power through the coronavirus outbreak, and markets have continued to slide. Many bankers believe the Fed will cut interest rates again at a meeting next week, but Trump has shown little patience.
“Our pathetic, slow moving Federal Reserve, headed by Jay Powell, who raised rates too fast and lowered too late, should get our Fed Rate down to the levels of our competitor nations,” Trump wrote Tuesday on Twitter. “They now have as much as a two point advantage, with even bigger currency help. Also, stimulate!”
The Fed has lowered interest rates so much, and there is so much demand for U.S. debt because of investor fear, that mortgage rates are at an all-time low. If the Fed continued to lower rates, it’s unclear what sudden benefit it could offer the economy.
The Fed has a number of tools it can deploy to juice the economy, including dramatically expanding its asset purchase program to inject more cash. This poses risks, though, because it can create bubbles that lead to an even bigger economic fiasco.
On Monday, the Dow Jones industrial average fell more than 2,000 points, and it is down more than 5,000 points since Feb. 12. Trump has long seen a high stock market as one of his biggest achievements, and he has told voters that they should support his reelection because of it.
While Trump has long publicly clashed with Powell, Monday’s outburst was an “eruption” unlike many others due to the political and economic stress that has gripped the White House as the coronavirus spreads, one of the officials said. It caused some White House aides to worry that the president’s fury with Powell could lead to upheaval and economic woes if he continues to lash out at the Federal Reserve.
Trump has blamed Powell in the past for the stock market’s poor performance. In 2018, when it was sliding because of anxiety about Trump’s trade war with China, he asked advisers whether he had the power to fire Powell.