Treasury Secretary Steven Mnuchin released a statement Saturday saying that he'd spoken to the president and that Trump has never indicated he will fire Federal Reserve Chairman Jerome Powell. | Jacquelyn Martin/AP Photo Economy Mnuchin tweets Trump denial as Republicans warn against firing Fed chairman

The Trump administration is moving before markets reopen to reassure investors and Congress that President Donald Trump won’t fire Federal Reserve Chairman Jerome Powell despite the president's distaste for Powell's interest rate increases.

After a pair of senior Senate Republicans publicly urged the president not to fire Powell, Treasury Secretary Steven Mnuchin released an unusual statement on Saturday saying that he'd spoken to the president and that Trump has never indicated he will fire Powell. Still, in the same breath the president criticized the Fed chairman.


“I totally disagree with Fed policy. I think the increasing of interest rates and the shrinking of the Fed portfolio is an absolute terrible thing to do at this time especially in light of my major trade negotiations which are ongoing, but I never suggested firing Chairman Jay Powell, nor do I believe I have the right to do so," Trump said via Mnuchin's Twitter account.

His tweet follows reports that Trump had discussed with advisers the prospect of dismissing Powell.

The message delivered by Mnuchin appears aimed at ensuring that markets don’t panic when they reopen on Monday over the prospect of a legal fight over the leadership of the central bank.

“Implicit in all stock prices and bond prices is a confidence about what the world will look like in the future,” said Torsten Slok, chief economist at Deutsche Bank Securities. “If this trust disappears overnight, it can have significant implications, not only pushing stock prices lower,” but also sparking new questions about whether inflation will be kept under control.

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Sen. Richard Shelby (R-Ala.), a former Banking Committee chairman who currently chairs the Senate Appropriations Committee, said Trump needs to be "very careful" how he proceeds with Powell. Powell — a Trump appointee — was confirmed in January by the Senate, 84-13.

"The Federal Reserve is set up to be independent of the presidency. Although I disagree with Powell at times, I’ve been on the Banking Committee longer than most people ever have, and I chaired it. I think the Federal Reserve should remain independent, as much as it can," Shelby said.

Sen. Pat Toomey (R-Pa.), who is in line to eventually chair the Banking panel, said, "Powell has done nothing to warrant being dismissed."

“After a long and dangerous experiment in monetary policy, conducted by others, Chairman Powell has gone a long way to restoring normalcy," Toomey said, referring to the Fed's decision to keep interest rates at historic lows for nearly a decade. "We should be grateful for that. I have no reason to believe that the president is planning to fire Chairman Powell. He certainly should not do so," Toomey said.

A senior administration official said Trump has privately raged about Powell's decisions on interest rates much as he has complained publicly. Fed policymakers on Wednesday raised rates for the fourth time this year after the president warned them not to do so.

But senior officials are strongly cautioning Trump against any attempt to remove Powell both because his legal authority to do so is highly questionable and because markets would likely react very negatively.

"It would be an outrageous thing to do and markets would treat it that way," said one person close to the White House who declined to be identified by name in order to speak freely.

Financial markets have cratered in recent days amid a partial government shutdown, rising interest rates and signs of a slowing economy. Shelby said Trump did not bring up the prospect of firing Powell at a lunch with congressional Republicans on Saturday.

Wall Street traders and money managers argue that the president would inject chaos and uncertainty into already fragile markets if he fired the Fed chair because he doesn't like his interest rate decisions,

"Market agents may disagree on the policy but they respect the person," David Kotok, chief investment officer at Cumberland Advisors, said of Powell. "The nation is best served if the president avoids the personalized attacks. Markets want an independent and skilled Fed chair, not a Trump patsy."

It’s unclear what specifically Trump can do to Powell. The president can remove a member of the Fed board only “for cause,” which does not include policy disagreements.

It’s more murky whether Powell could be replaced as chairman. Trump could attempt to nominate a different person for chair but would need the Senate’s cooperation. If the president did try to remove Powell without a Senate-confirmed replacement, Vice Chairman Richard Clarida – a Powell ally – would become acting chairman.

Trump’s displeasure with the Fed is particularly striking, given that four of the five current members of its board were appointed by him. All of them voted to raise rates in December over the president’s protests.

The central bank has been gradually raising rates to keep prices from rising too rapidly and to wean the economy off cheap debt that could eventually start to threaten the stability of the financial system.

While Fed officials estimate that two more rate hikes could be in store next year, they have also emphasized that more increases aren’t guaranteed, given the prospects for slower economic growth.

If the Fed raises rates too high, it could lead to a recession. A stone-faced Powell told reporters on Wednesday that “political considerations” do not play into the central bank’s decision-making.

“We’re always going to be focused on the mission that Congress has given us,” he said. “We have the independence, which we think is essential to be able to do our jobs in a non-political way. … Nothing will deter us from doing what we think is the right thing to do.”