President Donald Trump may not be pleased with Fed Chairman Jerome Powell, but he does not have the authority to dismiss the head of the central bank, Morgan Stanley said.
Earlier this week, Trump again criticized Mr. Powell, saying that the sale in the market and the plan to shut down General Motors personnel were a mistake on the part of the Fed. Powell became chairman of the Fed in February of this year after Trump appointed him and approved the Senate.
“The president can put forward his position, but when this position is confirmed, the president no longer has the authority over it.” The only way to remove a person from the office is that Congress will find the cause of this by voting and procedure, ”says Ellen Zentner, an economist. the class high in Morgan Stanley, replied on Thursday.
According to US law, Fed officials and other independent agencies "will be removed from office for a reason," the Washington Post article said Wednesday. The agency “adds” that the word “cause” often means disagreement in politics with the president. According to the Washington Post, the president was not fired by the president.
“So, Mr. Powell’s chairman still exists, and his decision does not depend on political trends, but on economic data,” said Zentner at a summit in Asia. Pacific 17th Morgan Stanley in Singapore.
In a speech on Wednesday, Mr. Powell said that he believes that the central bank's base interest rate was below the equilibrium, which means that it will not accelerate the pace of the US economy. slow down. This statement implies that the Fed may be closer to the end of a three-year tightening cycle, reports Reuters.
This comment by Mr. Powell helped the market show signs of improvement and was released shortly after Mr. Trump’s last criticism. As a result, the US stock market rose sharply, and the Dow Jones and S & P 500 turned green on Wednesday.
Although Powell’s recent comments differed in that the Fed was “on a long way” to equilibrium, chairman of Morgan Stanley Colm Kelleher said that the central bank was consistent. in managing the economy.
“I think his comments came to a clear conclusion in this speech … we see nothing but caution,” Kellech told CNBC.
However, the growth rate of the US economy showed signs of slowing down, which could lead the Fed to stop raising interest rates next year, Zentner said. Morgan Stanley expects the central bank to raise rates next month and two more in March and June before stopping, she added.
"Ultimately, if financial conditions drag on and global growth slows down, it will simply be difficult to raise interest rates." After the June meeting mentioned above, we believe that the growth rate of the Head will be below average, and this will make the Fed believe that they are in balance and may risk exceeding the balance and stay there, ”she said.
In addition, Morgan Stanley expects US economic growth to fall to 1.7% in 2019, from 3.1% this year.