Fed: Trump think have the power to remove Powell from his duties

The Fed has shown itself to be sufficiently dovish yesterday evening to satisfy the expectations of the market and advance the likelihood of a rate cut in the coming months, however, it was probably not shown enough dovish in the eyes of Donald Trump, who would have loved to see lower rates immediately.

Remember that for several months, the president Trump continues to criticize the Fed’s policy, arguing that rate increases of the last year have been of the errors.

Last Friday, he said on ABC News that he was not at all in agreement with Powell, adding that ” if we had had a different person at the Federal Reserve, which would not have increased so much over the interest rate, the economic growth would have been stronger “.

In this regard, it is worth noting that, according to information obtained by Bloomberg, the president of the United States Donald Trump would have to people you trust not later than yesterday that he believes have the power to replace Jerome Powell to the presidency of the Council of the Fed.

Trump would have pointed out that it could downgrade Powell to the post of governor of the board of directors, but it does not intend to do so for the time being, have added to the sources of Bloomberg.

Note that these rumors have appeared a few hours only after Jerome Powell declared at the meeting of the Fed yesterday evening that he had the intention of fulfilling his mandate of four years, and this in spite of the criticism from Donald Trump in respect of the policy of the Fed.

The lawyers of the White House think that it is therefore possible to proceed with a demotion if that is what the president wants, but some sources claim that all the legal experts of the White House do not agree on this subject.

In effect, the Federal Reserve Act explicitly protects the board of governors of the Fed against the removal by the president except ” for cause “. The courts have interpreted this phrase as requiring evidence of illegal activity or negligence with regard to the mandate of the Fed. A disagreement over monetary policy would not justify, therefore, not a dismissal, pure and simple.

But there is obviously possible to downgrade to limit its decision-making power.

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