Trump says he can remove Fed Chair Powell, potentially destabilizing markets
US President Donald Trump has asserted his right to fire or demote Jerome Powell, Chairman of the Federal Reserve. According to the New York Times, the president repeated his claim that he has the right to remove the Fed Chair and complained that the Fed is not leading but only following. Reportedly, Trump has yet to make a decision. The news came after he declared a national emergency. The White House said that Trump's coronavirus test result was negative.
If Trump finds a legal way to remove Powell, jittery markets may struggle. The Fed Chair – nominated by the current administration – is seen as a safe pair of hands. Global shares have plummeted in recent weeks amid the coronavirus crisis which is brining many economies to a standstill.
The world's most powerful central bank slashed interest rates by 50 basis points – double the standard 25bp dose – in an unscheduled announcement on March 3. The Washington-based institution also intervened in markets to inject liquidity and restart buying of long-term bonds.
From the current borrowing cost of 1-1.25%, the Fed is set to decimate interest rates to 0-0.25% in its upcoming meeting on March 18.
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