A Security guard stands in fron oft he US Federal Reserve building, on Aug. 08, 2011 in Washington DC. 
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How far would Trump go to punish his own Federal Reserve chairman?

Donald Trump’s contempt for the current leadership of the Federal Reserve is hardly a secret. Last fall, the president told reporters, “I think the Fed has gone crazy.” He soon after told a national television audience he believes the central bank “is going loco.”

As recently as two weeks ago, the Republican told CNBC, “We have people on the Fed that really weren’t – you know, they’re not my people.” It was an odd thing to say, since Trump personally nominated most of the Fed’s current board.

Nevertheless, there’s a new question as to what, if anything, the president intends to do about his frustrations.

Earlier this week, Bloomberg News reported that the White House in February “explored the legality” of demoting Fed Chairman Jerome Powell. Asked about the report, Trump didn’t deny it, telling reporters, “Well, let’s see what he does.”

That was on Tuesday afternoon, ahead of yesterday’s Fed announcement on interest rates. Powell, we now know, kept rates where they are, which isn’t what the White House wanted to hear.

All of which set the stage for a new Bloomberg News report last night:

President Donald Trump has told confidants as recently as Wednesday that he believes he has the authority to replace Jerome Powell as chairman of the Federal Reserve Board, according to people familiar with the matter. […]

White House lawyers think there is a way to follow through with a demotion if that’s what the president wants, but there has been some disagreement in the Counsel’s office, according to a person familiar with the matter.

It’s worth emphasizing that all of this could be little more than posturing. The White House wants Powell to cut rates, and it’s possible Team Trump is making provocative leaks as part of its lobbying campaign.

But that doesn’t make the circumstances any less remarkable.

After all, the Fed is an independent agency, which is supposed to operate free of political interference. The fact that Trump has lashed out publicly and wildly at Powell – the chairman Trump chose for the job – is without modern precedent.

The fact that the White House has kicked around the idea of demoting him – news that has now reached the public – makes the larger dynamic that much more extraordinary.

For his part, Powell told reporters yesterday, “I think the law is clear that I have a four-year term, and I fully intend to serve it.”

If the Bloomberg News report is correct, Trump and his team may be prepared to test that law.

Donald Trump and Federal Reserve

How far would Trump go to punish his own Federal Reserve chairman?