Powell says he would not resign as Fed chair if Trump asked

Roman Schwartz
January 5, 2019

Stocks rallied further after Fed Chair Jerome Powell told a gathering of economists that the U.S. central bank had no "pre-set" plan for interest rates and was carefully monitoring economic conditions.

The Dow Jones Industrial Average exploded by as much as 700 points after Federal Reserve Chairman Jerome Powell reassured investors that the central bank would pay attention to market conditions before implementing interest rate hikes. Powell also told the outlet that, even if he's asked, he will not resign.

The commander-in-chief has also ripped the Fed on Twitter and in interviews.

The broader market gains follow comments by the Fed Chair at the American Economic Association's annual meeting in Atlanta.

"Everyone would be better off if it was clear that the Fed is making its decisions based on its mandate and on its assessment of the long-term needs of the economy, which I'm completely confident that they will do", Bernanke said. Under the law that governs the Federal Reserve, a president can only remove a Fed chairman for cause.

Powell's remarks reassured investors who have anxious the Fed might raise rates excessively, but Jason Schenker of Prestige Economics suggested the Fed could.

Powell says he would not resign as Fed chair if Trump asked
Powell says he would not resign as Fed chair if Trump asked

"The problem in my opinion is Treasury and the Fed", Trump said. Asked if he had had any face-to-face meetings with Trump, Powell said he had not although he said previous Fed leaders have had discussions from time to time with previous presidents.

A new jobs report on Friday showed USA employers added more than 300,000 jobs in December - well above expectations. Yet signs are growing that Trump's tit-for-tat trade war with China is taking a toll: this week, tech giant Apple and grains trader Cargill warned about weaker sales in China. A third Fed president, Thomas Barkin of Richmond, said he is hearing more concerns about economic risks and trade.

The Fed's tightening cycle includes both rate hikes and the gradual shedding of its more than $4 trillion in assets.

Powell called the employment figures a "very strong report", though he showed no anxiety about the advance in wages.

"The markets are pricing in downside risks. and they are obviously well ahead of the data, particularly if you look at this morning's labour market data", Powell added.

And I'll just say, we're listening carefully to that.

Apple plunges after slashing revenue guidance for its holiday quarter (AAPL)
More than US$4 trillion has been pruned from American equity values in the worst fourth-quarter rout since 2008. Cook's comments echoed the concerns that have pushed investors to flee stocks over the past three months.

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