US Senator Hits Back at Trump’s Attacks on Federal Reserve Chair Jay Powell
A Republican member of the Senate committee that oversees the Federal Reserve has defended the independence of the US central bank, saying that no president has the authority to fire the head of the Federal Reserve. Senator John Kennedy, a Louisiana Republican who sits on the Senate banking committee, made the comments on NBC on Sunday, amid a growing row between President Donald Trump and Federal Reserve Chair Jay Powell.
According to The Financial Times, Kennedy stated, "I don’t think the president, any president, has the right to remove the Federal Reserve chairman. I think the Federal Reserve ought to be independent." The Financial Times also reported that Kennedy’s remarks come just days after Trump signalled that he believes he has the authority to fire Powell, telling reporters in the Oval Office on Thursday, "If I want him out, he’ll be out real fast, believe me."
The relationship between Trump and Powell has become increasingly strained in recent months, due to the Fed’s reluctance to cut interest rates since Trump returned to the White House in January. As The Financial Times noted, rate-setters, including Powell, have warned that Trump’s tariffs threaten to dent growth and raise prices, placing the Fed in a "challenging scenario" in which it would be forced to defend its inflation-fighting credentials above all else.
In a speech on Wednesday, Powell vowed to remain in office until the end of his term in May 2026, leading Trump to take to Truth Social on Thursday to say that "Powell’s termination cannot come fast enough!" However, Kennedy defended the Fed’s focus on keeping inflation in check, saying, "My experience with Jay Powell is that he’s got tiger blood. He’s going to do what he thinks is right, and he’s not going to go down in history as the Federal Reserve chairman that allowed inflation to become wild as a March hare, and he’s going to do what he thinks he’s got to do."
As cited by The Financial Times, inflation in personal consumption expenditures hit its highest level since the early 1980s in 2022 and remains above the central bank’s 2 per cent goal at 2.5 per cent. Some officials at the central bank believe that tariffs could drive annual price rises back up to as high as 5 per cent later on this year, should Trump reintroduce levies on the scale announced on April 2.
Austan Goolsbee, president of the Chicago Fed, also commented on the issue, saying that many businesses were doing "pre-emptive purchasing" of products that could be affected by tariffs, meaning "activity might look artificially high" before a drop-off in the summer. When asked about Trump’s attacks on Powell, Goolsbee noted that in countries where central bank independence had been challenged, "the inflation rate is higher, growth is slower, the job market is worse." As The Financial Times reported, Goolsbee stated, "I strongly hope that we do not move ourselves into an environment where monetary independence is questioned. That would undermine the credibility of the Fed."
The comments from Kennedy and Goolsbee highlight the growing concern about the impact of Trump’s attacks on the Federal Reserve’s independence. As The Financial Times noted, the issue has sparked fears that the Fed’s credibility could be undermined, which could have significant consequences for the US economy.
In response to the growing row, it remains to be seen how Trump will react to the criticism from Kennedy and Goolsbee. However, as The Financial Times reported, the issue has sparked a significant debate about the role of the Federal Reserve and the importance of its independence in maintaining economic stability.
The Federal Reserve’s independence is crucial in maintaining the credibility of the US economy, and any attempts to undermine it could have significant consequences. As Senator Kennedy noted, "I think the Federal Reserve ought to be independent." This sentiment was echoed by Austan Goolsbee, who stated, "I strongly hope that we do not move ourselves into an environment where monetary independence is questioned."
The issue highlights the ongoing debate about the role of the Federal Reserve and the importance of its independence in maintaining economic stability. As the US economy continues to navigate a challenging landscape, the Federal Reserve’s ability to make decisions without political interference will be crucial in ensuring that the economy remains stable.
Source: The Financial Times – US senator hits back at Trump’s attacks on Federal Reserve chair Jay Powell
