Business Minds

President-elect Donald Trump said in an interview that aired on Sunday that he has no plans to remove Federal Reserve Chair Jerome Powell.Appearing on NBCs Meet the Press with Kristen Welker, Trump was asked if he would try to replace Powell.No, I dont think so. I dont see it, Trump said. I think if I told him to, he would. But if I asked him to, he probably wouldnt. But if I told him to, he would.Welker followed by asking Trump if he had plans to ask Powell to resign. Trump responded, No, I dont.The comments mark the first time since the presidential election that Trump has publicly backed Powell. In July, Trump said he would not fire Powell if he won the election and in November, a senior adviser to Trump reaffirmed that Trump would likely allow Powell would finish his term as chairman.Trump, however, has threatened to remove Powell from his post on several occasions after the central bank raised interest rates in 2018 and even called Powell the enemy in 2019. In March 2020, Trump told reporters he had the right to remove (Powell) as chairman and that he has, so far, made a lot of bad decisions, in my opinion, after markets tanked amid the pandemic. But he also praised Powell for cutting rates to zero to prevent an economic collapse.Trump nominated Powell to serve as head of the U.S. central bank in November 2017. Powell was later reappointed by President Joe Biden to serve another term.Not permitted under the lawBarely 48 hours passed after Trumps election before a reporter asked Powell if hed resign if Trump asked him to. Powell responded that he would not.Not permitted under the law, Powell repeated twice.There are legal barriers for Trump, and any other president, to remove or fire a Fed chair. It requires what Americas central bank refers to as for cause.Ultimately, the Supreme Court could have the final say on what merits a for cause firing of a Fed chair. But while that fight, which would probably be lengthy, plays out, Powell would likely still get to stay in his job until his term ends.Trump wants input on interest ratesTrump had accused Powell of being political, and said that the Fed has considered rate cuts for the sake of maybe getting people elected in a February interview with Fox Business Networks Maria Bartiromo.Trump has also said that his threats to remove Powell were because interest rates were too high, but the Fed chair went too far by cutting rates too much.Trump has also shared another plan if he cant fire Powell: getting the central bank to consult him on interest rate decisions.I feel the president should have at least a say in there. I feel that strongly, Trump said at a news conference in August about the Feds interest rate decisions. I made a lot of money. I was very successful. And I think I have a better instinct than, in many cases, people that would be on the Federal Reserve or the chairman.The Fed is intended to be an independent governing body free from political influence so that it doesnt make decisions that could upset the scale of job creation and low inflation.Its unclear whether Trump would need congressional approval to take away the Feds independence. Either way, Powell is against the idea, and told reporters in September that independent central banks typically have lower inflation.Its a good institutional arrangement, which has been good for the public, and I hope and strongly believe that it will continue, he said.