On Wednesday morning, President Donald Trump informed reporters that it was "highly unlikely" he would remove Jerome Powell from his position as chair of the U.S. Federal Reserve. This statement followed reports that Trump had discussed the possibility in a letter to House Republicans the previous evening.
A senior White House official indicated that Trump had signaled his intention to potentially fire Powell after receiving approval from other Republicans. Congresswoman Anna Paulina Luna subsequently tweeted that Powell's firing was "imminent." However, during a meeting with the crown prince of Bahrain later that morning, Trump stated he would not fire Powell unless he was involved in some form of fraud.
The U.S. dollar index experienced a decline of 0.8 percent on Wednesday morning, and the stock market briefly dipped, causing concern among investors, though it later stabilized. Trump and his administration have repeatedly expressed dissatisfaction with Powell's reluctance to lower interest rates, as well as the expenditure of $2.5 billion on the central bank's headquarters renovation. Earlier in the month, Trump had urged Powell to resign immediately.
Powell has stated that he would have lowered interest rates if not for the tariffs imposed by Trump. The central bank is currently assessing the impact of significant policy changes on the U.S. economy before making any adjustments, aiming to ensure "macro stability, financial stability, and economic stability for the benefit of all people."
Legally, Powell cannot be removed solely due to policy disagreements unless there is evidence of misconduct or incapacity. Such a move would likely face legal challenges and would be unprecedented in modern U.S. history. Experts have also cautioned that removing Powell could undermine the central bank's independence, which is crucial for financial market stability.
Trump denied drafting a letter about firing Powell, stating he merely raised the idea. He mentioned that while many supported the idea, he was more cautious. He added that a change could be made in the next eight months and that he would select a suitable replacement, emphasizing the desire for lower interest rates.
Powell's term as chair of the Federal Reserve concludes in May 2026, but he can remain a member of the board of governors until 2028. Jamie Dimon, chief executive at JPMorgan Chase, emphasized the critical importance of the Fed's independence, warning that interfering with the institution could have unintended negative consequences.
5 Comments
Africa
Lower interest rates would stimulate the economy. Trump is on the right track.
Mariposa
Seriously, Trump's meddling with the Fed again? This is dangerous precedent.
Muchacha
Finally! Someone wants rates lowered! Let's go, Trump!
Bella Ciao
Unbelievable. He wants to fire Powell just because he doesn't like the interest rates?
Comandante
He's clearly just trying to shift the blame for the economy. Powell's doing his job!