Trump Furious, Mentions Firing Powell
Inside the administration, Treasury Secretary Scott Bessent and White House National Economic Council Director Kevin Hassett have pushed back against the idea of firing Powell before his term ends in May 2026, warning of the potential economic impact, people familiar with the matter said.
Powell said in a speech to the Economic Club of Chicago on Wednesday that the Fed must make sure tariffs don’t trigger a more persistent rise in inflation, and indicated the central bank would “wait for greater clarity before considering any adjustments to our policy stance.” The remarks dashed hopes for now that the Fed would step in with an interest-rate cut that could help stem the weeks-long stock market rout triggered by Trump’s tariff rollout.
At the White House on Thursday, Trump attacked Powell, whom he nominated to lead the Fed during his first term, saying he had been a “terrible” Fed chairman who was “too slow” to cut rates. Trump also said: “He’s going to have a lot of political pressure. You know it’s political, and I think there’s a lot of political pressure for him to lower rates.” As he did during his first term, Trump compared the Fed to the European Central Bank, which on Thursday lowered its benchmark interest rate by a quarter point to 2.25%.
Trump also insisted that he has the authority to remove Powell if he wants, despite the Fed’s status as an independent institution. His ability to remove top officials at institutions with independence has come under scrutiny in recent months, as the administration has fired senior officials at the Federal Trade Commission, the National Labor Relations Board and the Merit Protection Board.
The president did not directly address questions about whether he would fire Powell. Earlier Thursday, he posted on social media that “Firing Powell won’t be fast enough!” A Fed spokesman declined to comment on Trump’s remarks.
Powell is in the unenviable position of navigating stormy economic waters largely fueled by Trump, who has disillusioned him.
Most economists expect a new wave of tariffs on the U.S.’s global trading partners to hurt growth and jobs. But it would also likely fuel price increases at a time when inflation is still far from the Fed’s 2% target.
That would put Powell and his colleagues in the difficult position of deciding whether to lower interest rates to cushion the economy in the coming months, or keep rates high to contain price pressures.
In his Chicago speech, Powell reiterated his argument that “our independence is a matter of law,” and that Fed law dictates that “there can be no firings except for cause.”
Warnings have also come from outside the White House about the impact of Powell’s firing on markets.
Source: Bloomberg
