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  • Trump Blasts Fed Chair Jerome Powell

Trump Blasts Fed Chair Jerome Powell

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Bloomberg Apr 18 03:29 · 10.8k Views

President Donald Trump said Federal Reserve Chair Jerome Powell’s termination from his position can’t come quickly enough, arguing that the US central bank should have lowered interest rates already this year, and in any case should do so now. Union Advisors Founder and Bloomberg Opinion Columnist Nir Kaissar has more on the story

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Transcript

  • 00:00 Near want to talk to you about this whole farrago right?
  • 00:03 Because it it pops up every now and then that there's a huge
  • 00:07 potential that the Fed president will actually not serve out his term.
  • 00:12 And
  • 00:12 it's like inflation expectations, right?
  • 00:14 You can't let them get on anchor and you can't let this rumor become something bigger than it is.
  • 00:18 How importantly should we take the idea that
  • 00:21 Fed chair Powell may not be there through the end of his term?
  • 00:24 Markets don't seem to be taking it very seriously yet.
  • 00:27 And the reason I say that is because
  • 00:30 you know, grounded in markets is this idea that we have fiscal policy on the one hand and monetary policy on the other
  • 00:37 and that the two are independent of each other and they support each other and they work together
  • 00:42 in various ways.
  • 00:44 And if we have a situation where the president, any president
  • 00:48 is going to dictate to the Fed what it's going to do.
  • 00:52 And certainly it's going, if it, if it's going to contemplate
  • 00:55 swapping out the the Fed chairman because it doesn't like Fed policy.
  • 00:59 You're effectively, you've effectively gotten rid of monetary policy at that point.
  • 01:03 You folded monetary policy into fiscal policy.
  • 01:06 That is, that is a huge disruption
  • 01:09 and,
  • 01:10 and, and markets will not react to that very well at all.
  • 01:13 That so the fact that they have not reacted yet, I think yeah, it shows you that the probability is low.
  • 01:18 However,
  • 01:19 it's not just the probability you have to think about here.
  • 01:21 You have to think about the magnitude of the harm.
  • 01:23 And you know, as as I suggest, the magnitude of the harm of going in and replacing
  • 01:29 Fed chairman
  • 01:31 is is just absolutely bonkers.
  • 01:33 And so
  • 01:34 and so you have you have to take it seriously even if you think the probability is low.
  • 01:38 Yeah, I want to pull up this chart on the Bloomberg.
  • 01:41 It's Poly market betting odds, right?
  • 01:43 We always take a look at these and it says
  • 01:45 essentially what you've said.
  • 01:46 Don't hold your breath for a Powell stepping down betting markets.
  • 01:48 Don't expect a new Fed
  • 01:50 named soon.
  • 01:52 But then why poke the bear in ear?
  • 01:54 We had Mohamed El Erian even this morning saying that the president is very likely very angry with Powell for not
  • 02:00 bringing down rates.
  • 02:01 And then
  • 02:01 there might even be a case for the Fed chair to question whether he should step away himself.
  • 02:07 Why poke that bear?
  • 02:09 You know, I wish I knew the answer to that, Bonnie.
  • 02:11 I mean, I think it's very short sighted.
  • 02:13 I can, I can certainly understand why
  • 02:16 the White House wants help.
  • 02:19 You know, it's effectively going into a period or at least it is attempting.
  • 02:23 We'll see how well it succeeds.
  • 02:24 It's going into a period of fiscal austerity and that's going to slow the economy probably.
  • 02:30 We're seeing signs of a slowing economy.
  • 02:32 You can understand why the White House would want assistance from from monetary policy
  • 02:38 and the Fed chairman.
  • 02:40 But having said that, I mean, that's not a reason to browbeat them.
  • 02:44 Ultimately, it's in the White House's interest to have independent monetary policy because as I said, that's what undergirds the integrity of the market.
  • 02:53 And the last thing the White House should want is the market effectively losing faith in that.
  • 02:57 So I just view that as very short sighted and I just wish they would do it.