Trump is likely to allow the Fed chief to serve out the remainder of his term, according to an adviser

Washington
CNN
—

President-elect Donald Trump will likely continue to allow Federal Reserve Chairman Jerome Powell to serve out the remainder of his term, which ends in May 2026, according to a senior Trump adviser who requested anonymity to describe private conversations ends.

The adviser warned that Trump could change his mind at any time, but his current view – and that of Trump's economic team – is that Powell should remain at the helm of the central bank as it continues its policy of cutting interest rates. Trump told Bloomberg in July that he intended to keep Powell in his role at least for the duration of his term.

Still, Powell was peppered with questions about his job security during his first post-election news conference on Thursday. Powell responded with a curt “no” when asked whether he would leave his post at the Fed before the end of his term if President-elect Donald Trump asked him to do so. Powell later clarified that he believes Trump cannot fire him.

“Not allowed by law,” Powell said.

Trump named Powell, a former Republican private equity executive and member of the central bank's board of directors, as his frontrunner in 2018.

President Joe Biden reappointed him to a second four-year term.

Gary Cohn, a former Goldman Sachs director who served as economic policy director during Trump's first term, is said to like the job, but former Trump officials said the fact that Cohn resigned in protest of Trump's steel tariffs makes it highly desirable unlikely he'll get the job.

Names cited by sources close to the Trump transition include Kevin Warsh, who served on the bank's board of governors for five years and advised Trump during his first term; and Trump's former chief economist Kevin Hassett.

In July, before Trump was elected, the Fed chief was asked whether he planned to serve out the remainder of his term and he answered unequivocally, “Yes.”

Trump has frequently expressed his displeasure with Powell and has occasionally threatened to remove the Fed chairman from his post, something no president has ever done.

Trump has also criticized what he sees as a lack of transparency from the Fed, which conducts its policy deliberations behind closed doors and releases recordings of those discussions weeks later. CNN has reported that Trump aides have suggested that he would like these minutes and economic reports to be released in real time and the meetings to be conducted in camera.

Trump and Powell clashed several times during his first term, with the president-elect repeatedly threatening to remove him from office.

In 2018, Trump said he was considering replacing Powell with a new Fed chair after the central bank raised interest rates. However, a president cannot simply remove a Fed chair once confirmed unless he violates the law.

After markets plunged at the start of the pandemic in March 2020, Trump told reporters he had the “right to remove (Powell) as chairman,” adding that “I think he's made a lot of bad decisions so far.” ”

Trump also recently said that being Fed chairman is one of the easiest jobs in government. “You come into the office once a month and say, 'Let's flip a coin,' and everyone talks about you like you're a god,” Trump said at an Economic Club of Chicago event last month.

Trump also said that his previous threats to fire Powell “for keeping interest rates too high” had resulted in the Fed chair cutting rates “too much.”

While the Fed chair has the most influence at Federal Open Market Committee meetings, he is not the only official who determines what interest rates should be. At each monetary policy meeting, 11 other Fed officials are present to vote on interest rate moves.