Federal Reserve Chief Says 'No' He Won't Resign If Trump Asks

Roman Schwartz
January 7, 2019

Global stocks shot higher on Friday following a strong United States jobs report and dovish comments from Federal Reserve Chair Jerome Powell on the prospects for higher interest rates.

Although the USA economy appears strong, the central bank "is sensitive to the risks highlighted by investors and will be patient with its monetary policy in 2019", Powell reportedly said. The Dow Jones Industrial Average climbed 746.9 points, or roughly 3.3 percent, while the Nasdaq shot up 4.3 percent, or 275.4 points.

When asked whether he would comply with a resignation request by Trump, Powell said, "No". "It's a good message for the market that is starting to consume itself out of fear".

Those back-to-back market-friendly developments helped USA and European stock bourses surge higher and set aside for now nervousness over trade wars, a USA government shutdown and a slowing economy that have pressured stocks for most of the last month.

"As always, there is no preset path for policy", Powell said, along with his predecessors Janet Yellen and Ben Bernanke at the American Economic Association's annual meeting in Atlanta on Friday.

Trade uncertainty and concerns about global growth seem to be an important factor in the recent US weakness: tariff worries have surfaced repeatedly in Fed surveys.

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He also signalled a possibility of using emergency powers to build the wall without congressional approval and necessary funds. A longtime critic of the Republican leader, she was once arrested for heckling the then-candidate during his White House run.

Powell called the jobs report "very strong" and said he was also encouraged by the rise in the labor force participation rate and gains in wages, which he said "for me at this time does not raise concerns about too high inflation".

"And particularly with muted inflation readings that we've seen coming in, we will be patient as we watch to see how the economy evolves", he noted. Under the law that governs the Federal Reserve, a president can only remove a Fed chairman for cause.

"That's quite welcome", Powell said. Stocks have been pressured since mid-December when the Fed raised its benchmark interest rate a quarter-point while issuing a somewhat-hawkish statement despite lowering its rate hike projections from three to two. On Friday, his softer tone eased investor concerns about further tightening, noting that the Fed will be flexible with all of its monetary policy tools, including the important balance sheet.

While Trump has sent out a number of tweets criticizing Powell and calling the Fed his biggest threat, Powell said that he had not received any direct pressure from the White House. He also pledged to stay in his post even if asked to quit by President Donald Trump, who has repeatedly chastised the man he put in the job over the Fed's repeated rate hikes.

Asked if there were any plans to meet with Trump, he declined to give a specific answer, simply saying "I would say that meetings between presidents and Fed chairs do happen".

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