Former President Donald Trump said on Friday that he would not reappoint Jerome Powell as Federal Reserve chair if he decides to run again for president and wins in 2024, accusing Powell of making decisions intended to help Democrats.
Trump Accuses Powell of Playing Politics with Rate Cuts
In an interview on Fox Business Network, Trump claimed the Fed was likely to lower interest rates and take other steps to boost the economy right before the next presidential election to help Democrats retain the White House.
“I think the head of the Fed is political and I believe he’s going to be cutting interest rates, you will see an interest rate cut because he wants to have a stock market that’s up for the Democrats so they can keep the White House or win the White House,” Trump said.
“I’m not happy with him,” he said about Powell. “I would certainly think about replacing him.”
Trump nominated Powell as Fed chair in 2017 and the Senate confirmed the nomination. His four-year term expires next February. Most modern Fed chairs have been renominated by the president in office and confirmed for a second four-year term.
Powell Seen Lowering Rates, Fueling Inflation to Aid Biden
Trump repeated his assertion that Powell often does the opposite of what Trump wants him to do.
“Every time I wanted him to raise rates, he lowered them. Whenever I wanted him to lower rates he raised them. I mean I personally believe he’s trying to destroy the economy so the Democrats can win the election in 2024 by giving Joe Biden and the Democrats more stimulus,” Trump said.
The former president said massive government spending under Biden coupled with Fed policies to keep rates low and purchase assets is fueling inflation that will eventually become punishing.
“This guy kept interest rates so low and kept quantitative easing and purchasing, I call it the Powell printing press, and it’s going to be very tough to get inflation down without having a really big recession,” Trump said.
Trump said he will announce whether he will run for president again after the November 2024 congressional elections. Most Washington analysts expect him to run again.
| Year | Federal Funds Rate |
|---|---|
| 2020 | 0.25% |
| 2021 | 0.25% |
| 2022 | 4.00% |
| 2023 | 4.75% |
Table showing federal funds rate set by the Federal Reserve during Trump and Biden administrations
Doubts on Powell’s Reappointment if Trump Wins Again
Trump’s comments confirmed market speculation and media reports earlier this week that he would oppose renominating Powell when the Fed chief’s term expires in February 2025 should Trump win the 2024 election.
Most US presidents in recent decades who have served two terms have nominated a new Fed chair for their second stint in office. Powell, 69, was nominated by Trump to replace Janet Yellen as Fed chair in late 2017.
A Republican first named to the Fed’s Board of Governors by Democratic former President Barack Obama, Powell has drawn anger from Trump over his drastic efforts to stop the COVID-19 economic crisis with extreme measures like near zero interest rates and monthly bond purchases now totaling trillions of dollars.
High Inflation, Market Turmoil May Follow Rate Cuts
With inflation rising at its fastest pace in four decades, the Fed is expected to continue raising interest rates further this year after a spree of rate increases and other extraordinary policy actions over the last 10 months.
Powell now faces a difficult task to contain inflation without tipping the world’s biggest economy into recession or triggering a return to 1970s-style stagflation. Some investors also fear the Fed may not act quickly or aggressively enough to prevent inflation from becoming entrenched.
Former Treasury secretary Larry Summers told Bloomberg Television on Friday that Powell’s chances of being reappointed if Trump wins in 2024 are very low. He put the odds at “less than 50-50” and said there was “inflation risk” with Trump in office.
In the Fox Business Network interview, Trump also sharply criticized Biden for the giant $1.9 trillion stimulus passed last year, though it received minimal Republican support.
“Biden gave them everything they wanted – interest rates at zero and quantitative easing,” Trump said, calling policies under Biden “catastrophic.”
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