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Decides to retain board membership for now after his term as chair ends next month... Seemingly concerned about 'retaliation'
Despite his conservative leaning as an investment banker and treasury official, he leaves behind an 'anti-Trump' image
The 'unprecedented' last year of clashes with Trump marks a 'period of hardship' for the US central bank
U.S. President Donald Trump arbitrarily invents middle names when referring to individuals he dislikes.
For instance, he refers to former Republican Federal House Representative Marjorie Taylor Greene, once an ardent supporter who turned against him, as 'Marjorie Traitor Brown (implying Greene faded).'
President Trump habitually refers to Federal Reserve (Fed) Chair Jerome Powell, who is nearing the end of his eight-year term, as 'Jerome Too Late Powell.'
This expression was first used by President Trump on social media Truth Social in May last year, revealing his dissatisfaction that Chair Powell 'reacts too late' despite his repeated demands for benchmark interest rate cuts.
Chair Powell, a former Wall Street investment banker, served as Under Secretary of the Treasury in the George H.W. Bush administration before becoming a Fed Governor in 2012 through a nomination by then-President Barack Obama.
Chair Powell, a conservative Republican, took office in 2018, succeeding former Chair Janet Yellen. He was appointed by President Trump during his first term.
Subsequently, in 2022, then-President Joe Biden reappointed him, allowing him to serve as Fed Chair for another four years. His term expires on the 15th of next month.
Especially, the last year of his term was a period of trials and resistance for Chair Powell personally. For the Fed, the U.S. central bank, it was a time when unprecedented scenes unfolded continuously, pushing its value as an independent entity to the brink.
Chair Powell faced pressure to cut interest rates as soon as he met President Trump, his appointer, who returned to the White House in January last year.
At that time, the U.S. benchmark interest rate was 4.25-4.50%. In the process of overcoming the 'COVID-19 pandemic,' the Fed maintained virtually zero interest rates (0.00-0.25%) from 2020 to 2021.
At this time, large amounts of released funds stimulated inflation, and he pursued a hawkish policy, sharply raising interest rates to the 5% range to curb soaring prices and tighten liquidity.
President Trump judged that interest rates were too high. Believing that government debt should be reduced by lowering treasury interest rates for massive tax cut policies, he still insists that interest rates should be lowered to the 1% range.
As the head of the central bank pursuing price stability and full employment, Chair Powell ignored President Trump's demands. He froze interest rates five times in a row from January to July last year.
President Trump, who complained about the interest rate freeze streak, saying "He (Powell) and I don't get along," eventually began calling Chair Powell "this too-late person" from May and hurled crude insults like "an idiot who knows nothing."
President Trump's pressure on Chair Powell was not limited to words. He openly hinted at his dismissal and took 'concrete action' by raising issues with the renovation costs of the Fed building in Washington D.C.
President Trump's visit to the Fed building in July last year under the pretext of inspecting the construction site was unusual. Previous presidents had refrained from such actions out of respect for the Fed's independence.
President Trump stood side-by-side with Chair Powell, both wearing hard hats, in front of cameras. This led to the interpretation that the construction cost was an excuse, and the real intention was to pressure for interest rate cuts.
The Fed cut interest rates three times in a row by 0.25 percentage points each from September to December last year. This only met market expectations, considering inflation and employment conditions, and fell short of President Trump's hopes for a significant cut.
In early August last year, President Trump appointed his close aide, Stephen Myron, who was serving as the White House National Economic Council Chair, as a Fed Governor to fill a vacancy left by a predecessor's resignation.
At the end of the same month, he abruptly notified Lisa Cook, a Fed Governor considered a hawk, of her dismissal, citing alleged mortgage fraud. This was unprecedented in history.
By appointing a White House aide as a Fed Governor and deciding to dismiss an existing Fed Governor who held a different stance, even before any judicial judgment was made, these two personnel decisions were seen as undermining the Fed's independence.
In Cook's dismissal case, she faced a lawsuit amid criticism that it lacked legitimacy. This case is awaiting a final decision from the Supreme Court, and U.S. media observes that there is a high probability that a decision to retain her board membership will be made.
Chair Powell attended the Supreme Court's public hearing for Governor Cook's case, which he felt was a 'shared plight.' He explained his attendance by saying, "This case will probably be the most important legal case in the Fed's 113-year history."
The relationship between President Trump and Chair Powell, who have clashed on every issue, spiraled into disaster when the U.S. Department of Justice initiated an investigation into Chair Powell earlier this year regarding allegations of excessive spending on the Fed building renovation.
On January 11, Chair Powell publicly stated, "On the 9th, I received a grand jury subpoena and a threat of criminal indictment from the Department of Justice in connection with my congressional testimony last June regarding the Fed building renovation."
The initiation of an investigation into a Fed Chair was unprecedented. It was equally unprecedented for a Fed Chair to issue a video statement directly criticizing the president who appointed him.
Chair Powell directly criticized President Trump, stating, "The threat of criminal indictment is a result of the Fed having set interest rates based on what it deemed best for the public interest, rather than following the president's preferences."
This investigation was awkwardly halted. This was because it acted as an obstacle in the federal Senate confirmation process for Kevin Warsh, Chair Powell's successor candidate. Nevertheless, this became an indelible part of the Fed's 'history of hardship.'
On the 29th (local time), Chair Powell held his final press conference as chair, explaining the results of the Federal Open Market Committee (FOMC) meeting, and did not hide his concern that the Fed's independence was "at risk."
He stated that he had recently been informed by the Department of Justice that the investigation had been concluded, adding, "I find the recent developments encouraging and am carefully observing the upcoming procedures."
He also emphasized, "I have stated that I will not leave the board until this investigation is transparently, finally, and completely concluded, and I (still) stand by that."
Although it is customary for a Fed Chair to resign from the remaining term of their board membership upon completing their term as chair, Powell stated that he would retain his board membership for the time being. He can serve as a Fed Governor until January 2028 at the latest.
This is interpreted as being based on the judgment that the Trump administration's offensive against the Fed, linked to the building renovation costs, has not completely ended.
Chair Powell said, "My concern is a series of legal attacks on the Fed," adding, "These threaten our ability to conduct monetary policy without political considerations."
Furthermore, considering the Trump administration's 'political retaliation' stance, it is also understood that he took into account the possibility of the investigation being reopened at any time after his retirement, and separately, civil liability claims could follow.
Previously, when asked what he would do if Powell retained his board membership after his term as chair ended, President Trump replied on the 15th, "I should fire him."
Chair Powell stated, "I will continue to serve as a Governor for the time being" and "plan to quietly fulfill my duties," leaving room for another clash with President Trump, who had vowed to fire him from the board.
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