Former U.S. President Donald Trump has stated that he is “highly unlikely” to fire Federal Reserve Chair Jerome Powell, despite having privately floated the idea earlier this week. During a recent closed-door meeting with House Republicans, Trump reportedly waved a mock dismissal letter for Powell, signaling his dissatisfaction with the Fed’s current direction. While the gesture raised eyebrows, Trump later clarified that the letter was not serious and that any such action would only be considered under extreme circumstances, such as proven fraud.
The episode comes amid Trump’s growing frustration with the Federal Reserve’s approach to interest rates. He has openly criticized Powell for not reducing rates aggressively, suggesting that the current policy is holding back economic growth. Trump has also taken issue with a reported $2.5 billion renovation project at the Federal Reserve, calling it a misuse of public funds. These grievances, though not entirely new, have resurfaced with renewed urgency as Trump gains political momentum and eyes a potential return to the White House.
Trump’s remarks had an immediate impact on financial markets. The mere suggestion of removing the Fed chair caused brief volatility in stocks and Treasury yields. However, markets stabilized after Trump assured reporters there was no plan in place to oust Powell. Nonetheless, the incident has reignited concerns among economists and lawmakers over political interference in central bank operations. Several Republican senators, including Thom Tillis, emphasized the importance of maintaining the Federal Reserve’s independence, warning that undermining its authority could have long-term consequences for the U.S. economy.
Jerome Powell, who was initially appointed by Trump in 2017 and later reappointed by President Joe Biden, has maintained that he intends to serve his full term, which runs until May 2026. Legal scholars have noted that the president cannot remove the Fed chair arbitrarily; the Federal Reserve Act stipulates that dismissal must be for cause, such as misconduct or neglect—not simply for policy disagreements.
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This latest episode highlights the ongoing tension between the executive branch and the Federal Reserve over economic direction and interest rate policy. While Trump’s statement may have calmed immediate fears, the underlying friction suggests that debates over central bank independence and monetary control will remain central themes in the months ahead.
