Trump escalates threat to fire US Fed Chair Jerome Powell: Here's why

Donald Trump has long pressured the Fed Chair to cut interest rates, especially after the administration imposed global tariffs on trade partners

Tensions between US President Donald Trump and Federal Reserve Chair Jerome Powell have escalated, with Trump openly suggesting he may remove Powell over the central bank’s reluctance to cut interest rates.

 

In a series of public remarks on Thursday, Trump criticised Powell for being “too late and wrong” on rate cuts and accused him of obstructing economic growth. In a post on Truth Social, Trump declared, “Powell’s termination cannot come fast enough.”

 

What triggered Trump’s anger toward Powell?

The outburst followed Powell’s speech at the Economic Club of Chicago on Wednesday, where the Fed Chair acknowledged that the administration’s tariff policies were complicating the central bank’s goals. Powell said the Fed had to assess how trade tensions were affecting its dual mandate—managing inflation and employment—and consider the time frames over which each challenge could resolve.

 

 

His comments were seen as signalling a lack of urgency in cutting interest rates, angering Trump, who has repeatedly demanded rate cuts to offset the economic impact of rising tariffs.

 

Trump demands immediate interest rate cuts

Trump has insisted that interest rate cuts are essential to sustain growth as tariffs on Chinese goods climb to 145 per cent. He compared Powell’s approach unfavourably with the European Central Bank (ECB), which has recently reduced rates.

 

“Oil prices are down, groceries (even eggs!) are down, and the USA is getting rich on tariffs. Too late should have lowered interest rates, like the ECB, long ago, but he should certainly lower them now,” Trump wrote.

 

Earlier on April 4, following the ‘Liberation Day’ tariff announcement, Trump had posted: “This would be a perfect time for Fed Chairman Jerome Powell to cut interest rates. He is always ‘late,’ but he could now change his image, and quickly.”

 

Trump hints at firing Powell

According to Bloomberg, Trump has asked advisers whether he can legally remove Powell from office. A Wall Street Journal report earlier also noted discussions within the White House about terminating Powell.

 

Speaking at the White House on Thursday, Trump said, “I’m not happy with him. I let him know it,” raising fresh doubts over Powell’s job security.

 

Can Trump legally fire Powell?

Not directly. Fed chairs serve fixed four-year terms, and Powell’s tenure runs until May 2026. Legal experts and Fed officials have repeatedly said the president cannot dismiss the Fed Chair over policy disagreements. Removal would require cause and may involve Senate approval, making the move both legally complex and controversial.

 

Powell has previously said: “The law is clear. I have a four-year term, and I fully intend to serve it.”

 

What’s at stake for the Fed’s independence?

The Federal Reserve is designed to function independently of the executive branch. It sets interest rates and regulates monetary policy with the aim of stabilising inflation and employment.

 

Undermining its independence could erode market confidence and destabilise the global economy. Fed decisions impact interest rates, inflation, capital flows, and currency values. At a time when tariff tensions are straining economies, central bank autonomy is seen as critical.

 

Who is Jerome Powell?

Jerome Powell, a Republican, was appointed Fed Chair by Trump in 2018. With a background in law and finance, he worked at investment firm The Carlyle Group and held positions in the Treasury under President George H W Bush before joining the Federal Reserve Board of Governors.

 

Powell is known for a data-driven, centrist approach to monetary policy and has resisted political pressure, including from the president, to change the Fed’s interest rate trajectory.