President Donald Trump has said it is “highly unlikely” he will fire the head of the US central bank, hours after asking lawmakers whether he should sack Jerome Powell.
Stock markets and the dollar slipped following reports Trump had broached the idea with Republicans on Tuesday but quickly bounced back after he downplayed the discussions.
Dismissing the chair of the Federal Reserve would be a major break with precedent.
Trump has repeatedly called on Powell to lower US interest rates in a series of highly critical outbursts, which continued on Wednesday when the president called him a “knucklehead” and claimed he was “doing a lousy job”.
Speaking at the White House, the president acknowledged that he had revived discussions about firing Powell – who Trump nominated for the role during his first term – but said he was “not planning on doing anything”.
Pressed on whether he was ruling out the idea, he said: “It’s highly unlikely unless he has to leave for fraud.”
The president’s allies have joined in the attacks against Powell by accusing the central bank boss of mismanaging the renovation of Fed properties.
Last week, budget director Russell Vought called for an investigation into cost overruns on a $2bn (£1.5bn) project to renovate Fed buildings in Washington. Trump said earlier this week he thought it was “sort of” a fireable offence.
Analysts at Deutsche Bank said the recent shift in the focus of the attacks suggested the administration was building a case against Powell.
“Whether or not the president chooses to act on this case is an open question,” they wrote, noting that recent developments “suggest that the risk has risen”.
The Federal Reserve was established by Congress and has powers to set policy independent of the White House.
Powell’s second term as Fed chair ends in May next year and he can stay on as a governor of the central bank until 2028.
Under federal law, the president can remove Fed governors before the end of their terms “for cause”. The phrase typically implies serious misconduct.
Powell has repeatedly stated his intent to serve out his term as chair, denying that Trump has the power to fire him over a policy disagreement.
The Fed has also pushed back against the criticism of the renovations, updating its website with information to respond to some of the attacks.
It has said the renovations will ultimately reduce costs by allowing it to consolidate operations and blamed the increase in expenses on “unforeseen conditions” such as more asbestos than anticipated.
