"Tough Talk" Trump Ponders Powell's Ouster Amid Fed Clash
Trump sinks his teeth into Federal Reserve Chair Powell's position.
Facebook Twitter Whatsapp E-Mail Print Copy Link The US President's persistent calls for lower interest rates clash with the Federal Reserve Chair, Jerome Powell. Trump voices his exasperation.
In a recent outburst on his social platform, Truth Social, Donald Trump, the US President, expressed his growing frustration with the Federal Reserve's refusal to lower interest rates. "I've been sweet, I've been mild, and I've been angry - and the sweet and mild haven't worked," Trump wrote. He had earlier referred to Powell as a "moron," "fool," and a "dumbass."
Economy "Stubborn" Powell "spites me" Trump escalates his offensive against Fed Chair - is there a reason? Trump repeated his call for drastic rate cuts to a range of 1-2%. This reduction, Trump believes, could save the US billions in annual debt servicing costs. Currently, the interest rate stands at 4.25-4.5%, and surprisingly, the Federal Reserve didn't change it in their recent rate decision this week.
Removing Powell: A Risky Move?
Trump's frequent insults of Powell, whom he appointed during his first term, are no longer newsworthy. However, Trump's latest post suggests that he's grappling with the situation. "I realize my harsh criticism of him makes it tougher for him to do what he should—lower interest rates. But I've done everything else," Trump wrote. He hinted at the possibility of dismissing Powell. This suggestion, though, could lead to adverse consequences.
Economy Growth forecast reduced US central bank defies Trump - no rate cut The prospect of Trump removing the head of the legally independent US central bank is uncharted territory. Most legal experts question Trump's authority to do so. Such an action could have severe repercussions on financial markets.
Powell, however, has always shrugged off the criticism. In a recent statement, he reiterated the Fed's commitment to its mandate: managing stable prices and supporting full employment.
The Legal and Economic Implications
- Legal Challenges: The Federal Reserve Act dictates that the president can remove a Fed chair only "for cause"—not because of policy disagreements. Most legal scholars and the Supreme Court assert that a president cannot legally dismiss a Fed chair because of disagreements over interest rate policies or economic strategies.[5][2][3]
- Market Instability: A politically motivated removal of Powell could lead to financial market volatility, causing investor confidence to plummet.[4][3]
- Policy Uncertainty: Replacing the Fed chair with someone perceived as less independent could raise questions about future monetary policy decisions, impacting business investment, consumer confidence, and overall economic growth.[4][5]
- Credibility: If the Fed were seen as bending to political pressure, its ability to anchor inflation expectations would weaken, potentially making it harder to control inflation without severe economic consequences.[4]
Current Fed Policy Perspective
- Interest Rates: As of late June 2025, the Fed has chosen to keep interest rates steady, pausing further cuts due to ongoing uncertainty—especially regarding the impact of tariffs, recent geopolitical tensions (such as U.S. involvement in the Iran-Israel conflict), and evolving trade and regulatory policies.[2][4][1]
- Dual Mandate Issues: The Fed continues to balance its dual mandate of maintaining low unemployment and stable inflation. Powell has acknowledged the risks posed by changes in trade, immigration, fiscal, and regulatory policies, as well as the potential for renewed inflationary pressures from energy markets given recent conflicts.[2][1]
- Independence Affirmed: Both Congress and the courts continue to support the Fed’s independence, which is seen as a cornerstone of its ability to manage monetary policy without short-term political interference.[2][5]
In the hypothetical scenario of firing Jerome Powell, the Fed's independence and stability would face a significant challenge, but current policy remains cautious, independent, and supported by legal safeguards and bipartisan political commitment.[2][5][4]
- Community policy: Removing Powell, a Fed chair appointed by Trump, could lead to questions about future monetary policy decisions, affecting community confidence in the Fed's independence.
- Policy-and-legislation: The Federal Reserve Act dictates that the president can remove a Fed chair only "for cause" and not because of policy disagreements.
- Crime-and-justice: If a president were to remove the head of the legally independent US central bank due to disagreements over interest rate policies, legal and political consequences could arise, potentially creating a precedent for political interference in policy-making.
