U.S. President Donald Trump may be unhappy with Federal Reserve Chairman Jerome Powell, but he has no authority to remove the central bank head from office, Morgan Stanley said, according to CNBC.
Trump renewed his criticisms of Powell earlier this week, blaming the Fed chair for the recent market sell-off and automaker General Motors’ plans to close plants and cut jobs. Powell became Fed chair in February this year after being nominated by Trump and confirmed by the Senate.
“The President can nominate a chair but once the chair is confirmed, the President is out of it and the only way you can remove a chair from office is literally if they broke the law. Congress will have to find a cause to remove them from office through a vote and a procedure,” Ellen Zentner, Morgan Stanley’s chief U.S. economist, told CNBC’s Sri Jegarajah on Thursday.
U.S. law says Fed officials — and those of other independent agencies — can be “removed for cause,” according to a report by The Washington Post on Wednesday. The “cause” often means more than a policy disagreement with the President, the Post added.
So far, no Fed chairman has been removed by a President, according to the Post.
“So Chair Powell is here to stay. He’s not swayed by political inclinations, he’s swayed by what the data is telling him about the economy,” Zentner said at the Morgan Stanley 17th Annual Asia Pacific Summit in Singapore.
“Absolutely, this has nothing to do with politics. If the Fed pauses next year, it will have nothing to do with the message that the president has said to them,” she said.