MNI INTERVIEW: Trump Won't Fire Powell - Republican Senator

U.S. Senator Mike Rounds told MNI he does not expect President Donald Trump to fire Federal Reserve Chair Jerome Powell, highlighting the importance of an independent central bank for markets and suggesting he doesn't see a legal case for Trump to fire the Fed Chair. 

Rounds, a Republican senator from South Dakota and a member of the Senate Committee on Banking, Housing, and Urban Affairs, said "it's not the case" that Trump will fire Powell. "I think the President clearly understands that there has to be [Fed] independence," he said on Capitol Hill Wednesday. 

Trump "gets frustrated simply because he would like to have interest rates come down," Rounds said. "But I think he knows an independent Federal Reserve is very important to the markets and I think the President reads the markets very well." 

"Mr. Powell can be a real asset to the President long term because he is viewed as being independent. I think that is going to help the markets," the Senator said.

FOR CAUSE

Trump indicated to Republican lawmakers Tuesday that he will "likely" fire Federal Reserve Chair Jerome Powell soon, after receiving approval from them to make the move, a senior White House official told MNI Wednesday

The president then confirmed to reporters in the Oval Office that he spoke to lawmakers about ousting Powell but denied he was planning to remove the Fed chair. Trump added however that he could not rule it out. (See: MNI INTERVIEW: Powell Firing Would Set Off Legal Battle-Menand) 

The idea of a president removing a Fed chair is legally untested. Federal law says the chair can only be fired "for cause" and the action could have serious negative effects on financial markets.

Russ Vought, the Office of Budget and Management director, sent a letter last week to Powell accusing him of an "ostentatious" office renovation project that may be "violating the law." In testimony to the Senate last month, Powell called some descriptions of the renovation project "misleading and inaccurate."

The President has the authority to fire a Federal Reserve chair "only for cause," Senator Rounds said. "That would be up to them [the White House] to determine but I don't know what that would be at this point."