Summary
- President Donald Trump reportedly knows that firing Chairman Jerome Powell could cause chaos in the financial markets.
- President Trump mentioned the possibility of replacing Chairman Powell along with pressure for an interest rate cut, but his aides stated that dismissal could cause legal issues and market chaos.
- President Trump fears an event like the Great Depression and is concerned about the shock to the financial markets, leading him to postpone some tariffs for 90 days.
NYT Cites Trump's Aides
"President Aware of Market Chaos
If Powell is Fired"
Donald Trump, who is shaking Jerome Powell, the Chairman of the U.S. Federal Reserve (Fed), is reportedly aware that his actions could cause chaos in the financial markets.
The New York Times (NYT) reported on the 18th (local time), citing Trump's aides, that he knows firing Chairman Powell could bring greater volatility to the already unstable financial markets.
Previously, President Trump urged Chairman Powell to cut interest rates and even mentioned the possibility of replacing him during his term. He publicly pressured Chairman Powell, who stated that Trump's tariff policies could lead to inflation and slow economic growth.
The Fed, led by Chairman Powell, held the benchmark interest rate steady for two consecutive times at the Federal Open Market Committee (FOMC) last month. According to the Federal Reserve Act, which is the basis for the Fed's existence, a Fed governor can only be dismissed for cause.
Experts point out that while the president does not have the legal authority to dismiss the Fed chairman due to policy disagreements, there is no clear precedent from the Supreme Court. In fact, sources say that before taking office, President Trump considered dismissing Chairman Powell before his term ended and appointing Kevin Warsh, a former Fed governor.
However, Trump's aides reportedly informed him that dismissing Chairman Powell could cause significant legal issues and that such uncertainty could severely shock the financial markets. It is said that President Trump has somewhat accepted this advice.
In particular, President Trump is known to fear the occurrence of an event like the Great Depression during his tenure. The financial market turmoil, such as the stock market plunge following the announcement of reciprocal tariffs on the 2nd, seems to have triggered President Trump's anxiety. He postponed reciprocal tariffs for 90 days, citing the need for time to negotiate with countries requesting tariff adjustments.
Reporter Jonghyun Song scream@hankyung.com
Korea Economic Daily
hankyung@bloomingbit.ioThe Korea Economic Daily Global is a digital media where latest news on Korean companies, industries, and financial markets.
