Donald Trump’s Soprano-like threat that the ‘termination’ of Federal Reserve chairman Jerome Powell ‘cannot come fast enough’ has been headlined as one of his wildest thrusts to date, but is actually one of his most conventional. Prickly politicians always resent unelected central bankers, though they also see them as useful scapegoats for economic trouble.
Liz Truss longed to fire Andrew Bailey from the Bank of England; Gordon Brown gave Eddie George’s Bank its ‘independence’ but took away so much of its power that George nearly resigned; Margaret Thatcher never accepted the most potent modern governor, Gordon Richardson, as ‘one of us’. Trump’s predecessors took fewer potshots at the Fed because they were blessed – in Paul Volcker, Alan Greenspan, Ben Bernanke and Janet Yellen – with a run of excellent chairmen. Powell is also highly regarded in monetary circles but has enraged Trump (who appointed him) by shunning his calls for rate cuts and warning that a tariff war could lead to stagflation.
Powell has a year left of his term and reports say Trump has already tapped another Fed insider, Kevin Warsh, to succeed him. But as the US economy tanks, the President would be smart to keep Powell as a whipping-boy; and even if the Supreme Court permits, he’d be mad to provoke bond market mayhem by sacking him. Then again, as Matthew Parris and I seem to agree, it’s possible Trump really is mad. So frankly anything can happen.
A great time to buy
My wise old City boss Sir Martin Jacomb famously declared that insider share trading was ‘usually a victimless crime’, meaning that stock market dealings are rarely a zero-sum game.
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