Powell says he would reject any Trump request to resign

Henrietta Brewer
January 7, 2019

Fed watchers have said that the bar is very high for the president to remove Powell "for cause" as the law appears to require, provided Powell decides to fight the dismissal in court.

Markets soared on Friday ー the Dow Jones Industrial Average closing the day up close to 750 pointsーfollowing comments by Fed Chair Jerome Powell on monetary policy and reports that the jobs market is not slowing.

Powell's willingness to be flexible on interest rates was welcome news to investors, many of whom anxious that Fed chair risked cutting off the current economic expansion by continuing to raise interest rates despite signs the USA economy was cooling off a little.

The stock market has seen stomach-churning declines since October, a development that Trump has blamed on the Fed's continued rate hikes, although the president's trade dispute with China as well as concerns about global economic growth also played a part in the market volatility. The U.S. probably added 180,000 jobs in December, based on the median projection in a Bloomberg survey of economists.

Since mid-December, investors have been expressing disagreement with Powell's assessment of the economy, saying the Fed had it all wrong and that the economy was weakening. "Can we wait?", Cleveland Federal Reserve Bank President Loretta Mester said in an interview with Reuters.

In December, Powell said that the Fed's balance sheet reduction was on "autopilot".

The Fed is "listening sensitively" to the market signals, as well as data showing that inflation rates remain relatively muted, he added.

Her comments, from a sometimes hawkish Fed official, highlighted the change in tone at a central bank that, after two years of roughly quarterly rate increases, was now assessing the risks of going too far.

While Trump has sent out a number of tweets criticizing Powell and calling the Fed the biggest threat to the economy, Powell said that he had not received any direct pressure from the White House.

U.S. President Donald Trump has called the Fed's rate hikes a mistake and said he was not happy with Powell.

On the economic front, stronger-than-expected employment data helped regain steam for the United States economy.

Asked if any future meeting with Trump was scheduled, Powell said, "I have no news on that".

Meanwhile the Labor Department said USA employers added 312,000 jobs last month, a far stronger result than experts had anticipated.

Jerome Powell gave the USA economy a thumbs-up review last month.

Dallas Fed President Robert Kaplan said on Thursday that planned rate hikes should be halted for now, while on Friday Mester said she sees only one or two rate hikes this year.

"It's hard to square recession worries with the strongest job growth we've seen in years", said Alec Young, managing director of global markets research for FTSE Russell.

"When you get such a strong jobs report and a Fed chairman saying he's patient and flexible it sends a message to the markets that we're moving in the right direction", said Robert Pavlik, chief investment strategist, senior portfolio manager at SlateStone Wealth.

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