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Donald Trump has renewed his threat to fire Jay Powell and ruled out dropping a criminal investigation into the US Federal Reserve chair over renovations of the central bank’s Washington headquarters.
The president said on Wednesday that if Powell did not leave when his term ends on May 15 he would sack him and insisted the Department of Justice probe would continue despite mounting pressure to abandon it.
“I’ll have to fire him. Ok? If he’s not leaving on time,” Trump said in an interview on Fox Business. “I’ve held back firing him. I’ve wanted to fire him but I hate to be controversial.”
Powell has said that he will stay on as Fed chair if Kevin Warsh, Trump’s pick to replace him, has not been confirmed before his departure date, citing a longstanding precedent.
Further complicating the situation, a number of Republican senators, led by Thom Tillis of North Carolina, have indicated they will not vote to confirm Warsh until the probe into Powell is resolved.
But Trump on Wednesday ruled out dropping the investigation into Powell over his handling of the $2.5bn renovation of the Fed’s headquarters.
“Don’t you think we have to find out what happened there?” Trump said on Fox Business. “Whether it’s incompetence, corruption or both, I think you have to find out. I really do.”
Analysts have warned the investigation could lead to Powell remaining on the Fed board even after he steps down as chair. While chairs of the central bank have traditionally left completely when their term leading it expires, Powell could opt to remain a governor until 2028.
Powell has indicated he does not intend to leave the board until the investigation “is well and truly over, with transparency and finality”.
A federal judge last month blocked subpoenas issued by the office of Jeanine Pirro, the US attorney for the District of Columbia who is leading the investigation, writing in an opinion that prosecutors were using their investigation to force Powell to “knuckle under” and bend to the president’s relentless calls to slash borrowing costs.
The investigation has also worried many international central banks and investors, who view it as an attempt by the Trump administration to erode the independence of the Fed.
Janet Yellen, a former Fed chair and Treasury secretary, warned on Wednesday that she has “never seen a threat of this level to the Fed before”.
“How often does the president of a developed country express the view that the interest rate should be set to reduce the debt service cost?” she said at a conference in Hong Kong. “This is what you hear in a banana republic.”
The Fed did not immediately respond to a request for comment on the president’s remarks.
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