Hassett on Trump firing Powell: 'A highly uncertain legal matter'

Federal Reserve Policy & Leadership - The President is considering potential replacements for Jay Powell as head of the Federal Reserve, whose term ends next May [1][2] - The White House maintains that the Federal Reserve should remain independent, as designed, citing academic literature that demonstrates negative economic consequences when central banks lose independence [7][8] - The President has expressed policy disagreements with the Federal Reserve, believing it has been mismanaged, but the White House asserts he is not disrespecting its independence [8][9] - The President would like to see the Federal Reserve cut rates by as many as three percentage points [9] - There is internal debate and legal uncertainty within the White House regarding the President's authority to fire Jay Powell [17][18] Interest Rates & Economic Policy - If the Federal Reserve had acted at the same pace as the European Central Bank (ECB), rates might be approximately 250 basis points (2.5%) lower [10] - There is a concern that the Federal Reserve's independence is not being respected by its own members, given that several banks worldwide are reducing rates while the Federal Reserve has not changed rates since President Trump's inauguration [10] - The current US interest rate is considered an outlier compared to Europe's rate, given the normal correlation between ECB and Federal Reserve policy [11] - The Producer Price Index (PPI) showed zero inflation for the month [11] Trade & Tariffs - The President is engaged in ongoing trade negotiations with numerous countries, with approximately 20-25 more countries reaching out to the US Trade Representative to begin negotiations [23] - The President will compare the outcomes of these negotiations to the offers in the letters and decide what is best for America, with a decision expected by the beginning of August [23][24] - The White House argues that the President's trade policy has not caused a spike in inflation; in fact, inflation has decreased [25][26] - The Council of Economic Advisors has released a report indicating that the price of imported goods has been decreasing, despite the imposition of almost $200 billion in tariffs [27]