Standard operating procedure for Donald Trump when it comes to news stories that reflect unfavorably on his administration is to deny the reports and castigate the offending media outlet as an “enemy of the people”.
Not so on Tuesday, though. Or at least not with regard to Bloomberg’s scoop that White House counsel explored the legality around demoting Jerome Powell in February.
“Let’s see what he does”, Trump remarked, when asked by CNBC’s Eamon Javers whether Powell may still be in danger of a demotion. The president’s response suggests the administration leaked the story in an effort to influence the decision.
The president also reiterated demands for a “level playing field”, which, in his mind, means the Fed should cut rates in order to shrink the policy divergence between the US and its trading partners so that weakness in foreign currencies doesn’t water down the tariffs.
During the same chat with reporters, Trump referred directly to Wednesday’s Fed decision. The president is now explicitly tying Powell’s future as Fed chair to a specific FOMC meeting. It doesn’t get much more egregious than that when it comes to encroaching on Fed independence.
“The Fed should be independent”, Elizabeth Warren said Tuesday, adding that Trump’s meddling is perilous.
But Warren’s criticism wasn’t nearly as sharp as that which emanated from former vice chair Stanley Fischer, who renewed his critique of Trump’s attacks on the central bank while in Sintra for the ECB forum.
“[The US economy] is doing reasonably well, but you wouldn’t know that if you listen to the president of the United States”, Fischer said, just 48 hours after making similar remarks at a workshop at the Interdisciplinary Center Herzliya.
On whether the Fed should cut rates to juice the labor market further, Fischer did not mince words. “It would destroy the independence of the Fed”, he said, while sitting on a panel discussion with Mark Carney and Mario Draghi, who Trump assailed on Tuesday morning. “It’s not something that should be done”.
Late Tuesday evening, Bloomberg ran a series of followup headlines, one of which read: “Trump asked White House lawyers for options on removing Powell.”