Home Economy White House Reportedly Explored Legality Of Demoting Fed Chair Powell, Kudlow Denies...

White House Reportedly Explored Legality Of Demoting Fed Chair Powell, Kudlow Denies (Kinda)

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Update: Minutes after the Bloomberg reports, White House chief economic advisors Larry Kudlow denied any considerations to demoting Fed Chair Powell, “we are not taking any action to change Powell’s status.”

But then, apparently by mistake, confirmed the discussions had taken place by admitting that the “Powell demotion story was a six-month-old story.”

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Since President Trump first discussed firing Jerome Powell, out of a sense of frustration that his Fed Chair pick was not dovish enough, he has regularly expressed his displeasure at central bankers lack of willingness to do whatever it takes to keep him in office (with today’s Draghi debacle top of mind) and the weekend’s interview comments:

“[Powell]’s my pick — and I disagree with him entirely,” Trump said last week in an interview with ABC News.

“Frankly, if we had a different person in the Federal Reserve that wouldn’t have raised interest rates so much we would have been at least a point and a half higher.”

But, things reportedly got a lot more serious than some spurious tweets and off the cuff remarks, as Bloomberg reports, according to people familiar with the matter, the White House explored the legality of demoting Powell in February, soon after Trump talked about firing him.

Bloomberg then reports that Trump’s team conducted the legal analysis and came to a conclusion that has remained closely held within the White House, the people said, requesting anonymity to discuss internal deliberations. It isn’t clear whether Trump directed the legal review, and the people didn’t describe the outcome.

Fed spokeswoman Michelle Smith said in an email: “Under the law, a Federal Reserve Board chair can only be removed for cause.”

via zerohedge

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