As the markets weather their worst week since the Great Recession of 2008, U.S. President Donald Trump is weighing the idea of terminating Federal Reserve chairman Jerome Powell.
Recent reports indicate that as the markets continue to spiral, the White House has become more anxious. The Dow Jones Industrial Average dropped by seven per cent this week, marking its worst week in 10 years, after the Fed raised its benchmark interest rate on Wednesday for the fourth time in 2018.
In addition, the S&P fell 7.1 per cent and the Nasdaq Composite sunk into a bear market.
WATCH: Trump slams Federal Reserve over raising interest rates ‘too fast’
Powell offered an explanation for the hikes, stating the Fed could gradually raise borrowing costs and limit potential U.S. economic growth because of the current strength of the job market.
The Fed generally raises rates to rein in unsustainable growth and prevent annual inflation from rising more than two per cent.
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Bloomberg News reported on Saturday morning that Trump has discussed firing Powell over concerns about slowing the economy, though his advisers aren’t certain he’ll take the plunge. Several outlets have confirmed the discussions since the initial report.
As the U.S. government enters a partial shutdown over funding disputes for Trump’s border wall, experts have warned that the plunging stock markets could hint at greater challenges ahead.
WATCH: Bruising week for U.S. stock markets
Gregory Daco, chief U.S. economist at Oxford Economics, told the Associated Press that he thinks the underlying fundamentals for growth remain strong and that the expansion will continue. But he cautioned that the falling stock market reflects multiple hazards that can feed on themselves.
“What really matters is how people perceive these headwinds — and right now, markets and investors perceive them as leading us into a recessionary environment,” Daco said.
According to Bloomberg, it’s unclear whether Trump has the legal authority to fire Powell, as the rules about removing the head of the Federal Reserve are ambiguous.
If he were relieved of his duties, Powell would fall in line behind several officials who have announced their exit from the Trump administration since the November midterm vote. These include former Attorney General Jeff Sessions, chief of staff John Kelly, Interior Secretary Ryan Zinke, Defence Secretary James Mattis and the U.S. Envoy to the IS coalition, Brett McGurk.
Two weeks ago, Trump told reporters that Powell was “being too aggressive, far too aggressive, actually far too aggressive.” He also told Reuters that the central bank “would be foolish” to proceed with a rate hike.
WATCH: U.S. stocks drop to new low as world stocks, oil tumbles
—With files from Reuters and the Associated Press
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