President Donald Trump is adamantly opposed to the Federal Reserve’s rate hike campaign, but has never suggested firing Fed Chairman Jerome Powell, Treasury Secretary Steven Mnuchin said on Saturday, moving to defuse a controversy that could roil global markets even further.
Earlier in the day, White House Press Secretary Sarah Huckabee Sanders also stated that there were no plans to dispatch the Fed Chair.
The Dow Jones Industrial Average dropped 7 percent this week, its worst week in 10 years, on fears the Fed is unnecessarily slowing the economy as the central bank on Wednesday raised its benchmark interest rate for a fourth time this year. The Dow, which Trump cheered when it was at record highs earlier this year, is now down 9 percent in 2018.
Until Trump took office, presidents were historically circumspect about criticizing Federal Reserve policy, eager to preserve the central bank’s independence even if they disagreed with its moves. Yet the current president has politicized the Fed’s decisions with alacrity, leaving many in the investor class alarmed by the latest developments.
Markets have been extremely volatile in the wake of the Fed’s tightening campaign, with Wall Street fearful that the central bank could be committing a policy error similar to the year 2000, when a Fed rate hike was partly blamed for tipping the economy as the dotcom bubble burst.
However, Wall Street analysts on Saturday roundly criticized the idea that Powell should be fired, especially during a precarious time for global markets and the U.S. economy.
–CNBC’s John Melloy contributed to this report.