The possibility of U.S. President Donald Trump firing Fed Chairman Jerome Powell has been raised again. National Economic Council Director Kevin Hassett stated today that Trump could fire Powell due to the cost overruns for the renovation project of the Fed's headquarters.
Everyone knows the Trump administration has pressured Powell to cut interest rates for a long time. This pressure has raised concerns about the Fed's independence, and the possibility of Powell being fired had previously shocked the markets. Indeed, earlier this year, even a rumor like that caused an increase in interest rates and a market sell-off.
Although Trump stated last Friday that he would not fire Powell, Hassett's statement suggests that this possibility may be reconsidered.
The White House has increased pressure by accusing the renovation project of the Fed headquarters in Washington of exceeding a budget of $700 million. On July 10, Budget and Management Office Director Russ Vought sent a letter to Powell, questioning the project and requesting clarification on its legality.
Vought's letter to Powell gives him seven working days to respond, meaning by the end of this week and possibly giving Trump a chance to act before the next Fed meeting begins on July 29.
Speaking to ABC, Hassett said: "Whether the president pursues this path depends on the Fed's response." When asked if Trump could fire Powell, Hassett replied: "That is being considered, but if there is a good reason, then he could do so."
Jerome Powell's term will end in May. Meanwhile, speculation about Hassett possibly succeeding Powell is growing. Economists consider Hassett, one of the most influential figures at the White House, a strong contender.
