Wednesday, June 19, 2019

Trump Tightening the Vise Around Fed Chairman Powell's Head

First, we had a report early Tuesday from Bloomberg TV that the White House had asked the general counsel's office to determine the legality of stripping Jay Powell of his chairmanship of the Federal Reserve Board.

As I reported in the EPJ Daily Alert, the timing of this report, just as the Fed's monetary policy group, the Federal Open Market Committee, began two days of deliberation about monetary and interest rate policy, was not an accident.

Now via The Washington Post, we have a report that "President Trump opened the door Tuesday to possibly firing Federal Reserve Chair Jerome H. Powell."

WaPo was specifically referring to Trump's comment when asked about Powell. From WaPo:
“Let’s see what he does,” Trump said when a reporter asked him whether Powell should be removed as chair.
Bottom line: This is all about Trump pressure. He wants the Fed to cut rates and he will do his Roy Cohn-inspired street-bullying best to see to it that the cuts are made.

He is firing warning shots at Powell right now but if Powell doesn't blink and cut rates soon, it is going to get ugly.

No doubt, Trump is also internally putting pressure on Treasury Secretary Steve Mnuchin who is close to Powell and recommended him to Trump for the chairmanship.


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