White House on Powell's possible dismissal: "Possible if there are valid reasons"

There is speculation that President Donald Trump of the United States is seeking to remove Jerome Powell, Chairman of the Federal Reserve (Fed), citing alleged excessive construction costs of the Fed building. President Trump has continued to pressure Chairman Powell for his dismissal after Powell refused to accommodate his requests for interest rate cuts.

Kevin Hassett, Chairman of the White House National Economic Council, was asked in a June 13 (local time) ABC News interview whether the Fed's costly renovation could constitute grounds for dismissing Chairman Powell. He replied, "Whether the president decides to move in that direction will largely depend on the responses Russell Vought (Director of the White House Office of Management and Budget) receives from the Fed to his inquiries."

Director Vought accused the Fed of allegedly violating related regulations by spending an excessive budget on the headquarters' renovation during Powell's tenure, and sent a protest letter to Chairman Powell on June 10. The White House claims that the installation of a rooftop garden, artificial waterfall, VIP elevators, and marble decorations increased the construction cost by $700 million to a total of $2.5 billion, exceeding initial plans.

In response, Chairman Hassett stated that the Fed's building renovation was the second most expensive in U.S. history after the Federal Bureau of Investigation (FBI) headquarters renovation, saying "The Fed has a lot to explain."

When asked if the president had the authority to dismiss the Fed Chairman, Hassett replied, "It's a matter we're reviewing, but if there are grounds, then the president certainly has that authority." Hassett is being mentioned as one of the candidates for the next Fed Chairman.

American media outlets have assessed that the White House and some members of the Republican Party raising issues with the Fed's construction costs suggest the Trump Administration is seeking grounds to dismiss Chairman Powell.

There are also growing concerns over the potential realization of the Trump Administration's dismissal of Chairman Powell. George Saravelos of Deutsche Bank, in his report, evaluated that the financial markets are not fully reflecting the risks and the possibility of such a move by President Trump. He warned, "The market currently sees the probability of Powell's dismissal as less than 20%, meaning risks are being significantly underestimated." On major event prediction betting sites such as Polymarket, the probability of Powell's dismissal is listed at below 20%, and the U.S. dollar remains relatively stable in foreign exchange markets.

However, Strategist Saravelos forecasts, "If Powell is dismissed, the dollar could plunge 3–4% within 24 hours, and U.S. Treasury yields could rise by 0.3–0.4 percentage points." He especially emphasized, "The Fed sits at the center of the global dollar system, and the impact of such a dismissal would not be limited to the United States but could spread worldwide."

New York=Shin-Young Park, Correspondent nyusos@hankyung.com