Trump deliberates on legal action against Federal Reserve Chair Powell - Trump mulling over legal action against Federal Reserve Chairman Powell.
The US Federal Reserve, and specifically its Chairman, Jerome Powell, have found themselves at the center of a heated debate, with the unexpectedly high costs of renovating the central bank's buildings becoming a significant point of contention.
In recent weeks, President Donald Trump has mentioned various figures regarding the renovation costs, with the latest figure being 3.1 billion dollars. However, Powell has denied hearing this from anyone, stating that the building in question was already completed five years ago.
Trump has used the significantly increased renovation costs as an argument to push for Powell's removal. Yet, it is important to note that the hurdles for removing Powell are high, and a "valid reason" is required. The Federal Reserve Act stipulates that the president can only fire the Fed Chair "for cause," so removing a chair for policy disagreements or economic strategy is legally challenging.
The core issue, however, is something else beyond the renovation costs. Jerome Powell has so far resisted calls for a rate cut and has thus become a target of President Trump. The US Federal Reserve has been keeping interest rates at a high level for months, a decision not made solely by Powell but by the entire Federal Reserve Board.
Economists warn that a reduction in the interest rate could also fuel inflation. Yet, a reduction would stimulate the economy and save the government billions in debt service.
Recent legislative proposals, such as the TOO LATE Act introduced in 2025, seek to explicitly allow the president to remove the Fed Chair based on economic policy grounds. If passed, this bill would create a formal and technical process enabling removal for reasons beyond misconduct, such as disagreement over monetary policy effectiveness.
Such a change would have profound implications for Fed independence and financial markets. Removing a Fed Chair over policy disagreements could undermine the Fed's independence, which is widely regarded as essential for credible monetary policy and market stability. Confidence in the Fed depends on its independence; presidential interference might lead to increased market volatility or loss of credibility domestically and internationally. Legal ambiguity could also arise, as the current law is ambiguous regarding "for cause," and action by a president without clear legislative backing could face legal challenges and create constitutional disputes over separation of powers.
In summary, while a president cannot currently remove a Federal Reserve Chairman at will, new legislative efforts aim to enable this under specified economic criteria. The implications of such a change are substantial and could reshape the relationship between the executive branch and the Federal Reserve.
The Commission, in light of the escalating political tensions and recent legislative proposals, has also been asked to submit a proposal for a directive on the protection of the environment, as potential policy changes regarding the Federal Reserve could have profound implications for other critical areas, such as climate policy.
This push for legislative reforms in the US, including attempts to allow the president to remove the Fed Chair for economic policy disagreements, can be seen as part of a broader trend in politics, where war-and-conflicts, policy-and-legislation, and general news often intersect and influence one another, shaping the broader political landscape.
