This week, Jerome Powell confirmed that he won’t be leaving the Federal Reserve next month after ending his term as chairman. However, some of his critics appear to be exploring ways to change his mind, according to On the Money.
“A good idea would be to revoke his parking privileges at the Fed building,” suggested an economist connected to the White House and President Trump, although he seemed to be half-joking.
Interestingly, some Wall Street analysts are urging Powell to resign quickly, proposing Kevin Warsh, a Trump appointee, as his replacement.
“Maybe he should move his office to the basement of the Fed, where there’s water damage from construction,” suggested the economist during his remarks.
It’s unclear how seriously these remarks are being taken by the Trump administration or Kevin Warsh, who is expected to be nominated to succeed Powell.
A spokesperson for the Fed declined to comment. When asked for input, a White House representative referenced a post from the president claiming, “Jerome ‘Too Late’ Powell wants to stay at the Fed because there are no other jobs available. No one wants him.”
A significant factor could be the prospect of indictments related to the Fed headquarters incident against the Trump administration’s Justice Department, as insiders close to Powell have mentioned.
“If all goes well, he might step down soon,” said a Wall Street executive familiar with Powell. “However, if any legal action arises, he could remain as governor for up to two more years.”
When Pirro announced that he was handing the investigation over to the Fed’s inspector general, he also noted that they wouldn’t hesitate to reopen a criminal inquiry if warranted, though this didn’t seem to resolve the issues at hand.
There’s also President Trump’s desire to push Powell out, stemming from years of tension over the Fed’s interest rate decisions, which Trump believed were too slow for his liking. Warsh, who holds hawkish views on inflation, may be more inclined to cut interest rates but has also committed to reducing the Fed’s balance sheet, a move he argues is essential to tackling inflation above the 2% target.
However, Powell can’t unilaterally implement policy changes, especially regarding rate cuts. He requires the backing of the Federal Open Market Committee, which is critical, and if he retains his position, he may play a vital role in votes against reducing rates.
Unless, of course, the Trump team makes his role as governor increasingly difficult.
“I predict he might stay for a bit longer, but ultimately he will choose to leave,” remarked another economist close to Trump, reiterating the suggestion that they should revoke Powell’s parking spot or have him relocate to the basement.
