Foreign Media: 'Besant, U.S. Treasury Secretary, Persuaded Trump Not to Fire Powell'

The Wall Street Journal (WSJ) reported on the 19th (local time) that Scott Besant, Secretary of the Treasury, advised against firing Federal Reserve (Fed) Chair Jerome Powell when President Donald Trump considered his dismissal over his failure to meet Trump’s expectations for lowering interest rates.

According to WSJ, Secretary Besant recently mentioned to President Trump why Powell should not be dismissed, citing the potential negative impact on markets and the economy.

In particular, at last month's Federal Open Market Committee (FOMC) meeting, Fed board members indicated two benchmark rate cuts were expected within this year. With markets responding positively to President Trump's economic policies and the economy performing well, Secretary Besant argued there was no need to fire the Fed Chair.

He also pointed out that if President Trump were to dismiss Powell, Powell could file a lawsuit to suspend and overturn the dismissal. If the effect of dismissal is suspended by an injunction and the main lawsuit is not resolved by the expiration of Powell’s term in May next year, the dismissal may become pointless.

Some have also pointed out, Secretary Besant advised, that if Powell is dismissed, the process of confirming his successor could be delayed in the Senate. In this case, Philip Jefferson, the Fed Vice Chair appointed by former President Joe Biden and a close associate of Powell, could temporarily serve as acting chair.

President Trump was said to have mentioned the plan to remove Powell to Republican lawmakers recently, but on the 16th he answered reporters’ questions by saying, "There are no such plans." In the end, according to WSJ, it appears that Secretary Besant may have succeeded in persuading President Trump.

However, President Trump previously pointed out the 'excessive spending' issue regarding the $2.5 billion (approx. ₩3.5 trillion) cost for renovating the Fed building and said that he would look into whether Powell was responsible, suggesting that the possibility of Powell’s dismissal during his term has not been completely ruled out.

In a phone interview with the online news site Real America's Voice on the 16th, President Trump was asked whether Powell would resign before his term ends. He replied, "If he wants to resign, that would be great. That’s up to him."

Reporter Goh Jung Sam, Korea Economic Daily jsk@hankyung.com