Donald Trump has renewed his criticisms of Jerome Powell, the chairman of the Federal Reserve of the United States, reaffirming his threat to fire him for refusing to cut interest rates. Powell, for his part, has made it clear that he would not resign if Trump asked him to, and has stated that his dismissal without cause would be illegitimate. Trump's intention is to revoke a legal precedent from 1935 that limits the president's power to remove Fed officials.
Jerome Powell was nominated by Trump in 2017 and was appointed for a second term by Joe Biden in 2022. Experts like Sarah Binder from the Brookings Institution believe that a possible dismissal of Powell would increase uncertainty in financial markets, something that would not be well received. Despite this, the Trump administration seems to be laying the groundwork for a confrontation with Powell.
During an intervention at the Chicago Economic Club, Powell rejected political interference and assured that the Federal Reserve will make decisions in the interest of the U.S. economy. While Trump continues to criticize Powell, he insists on his ability to fire him. Although Powell's term ends in 2026, Trump's constant attacks create uncertainty about the future of the Fed and its independence from the White House.
Legally, the possibility of Trump firing Powell is a complex and unprecedented issue in the history of the Federal Reserve. The Fed Act allows for the dismissal of board members, including the chairman, "for cause." Treasury Secretary Scott Bessent has mentioned plans to interview potential replacements for Powell in the fall, while the U.S. Supreme Court is evaluating a case on the president's authority to remove high officials from independent agencies.
