The US President had already nominated former US Central Bank Governor Kevin Warsh as Fed chief in January. However, his confirmation in the US Senate is still pending and there is resistance because of Trump’s actions against Powell. The president had, among other things, insulted the 73-year-old as an “imbecile” and “loser” because he did not initiate significant cuts in key interest rates. Presumably at Trump’s initiative, the legal authorities launched an investigation against Powell for allegedly massively inflated costs in the renovation of the Fed building in Washington.
It’s not just the opposition Democrats who are accusing Trump of undermining the central bank’s independence. Republican Senator Thom Tillis also refuses to agree to Warsh’s appointment as long as the investigation against Powell is ongoing. The appointment is therefore blocked. According to current rules, Powell could then remain at the top of the Fed beyond mid-May.
“I’m going to have to fire him,” Trump told Fox Business on Wednesday. He wanted to fire Powell anyway. In fact, Trump had already threatened to fire the Fed chief in the past. However, the central bank is independent and dismissal of the bank boss is only possible in exceptional cases.
On Tuesday, the Senate Banking Committee announced that it would hear Trump’s nominee Warsh next week to confirm his nomination. U.S. Treasury Secretary Scott Bessent told reporters in Washington that the U.S. government wanted Warsh in office as the new Fed chief “as quickly as possible.” Regarding Tillis’ blockade plans, Bessent said: “I think we’ll let this take its course.” He considers the Republican senator to be “a sensible man.”
