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Donald Trumpappointed Jerome Powell as the Fed chief in 2017 and his term will end in May 2026. This is not the first time that Trump has threatened to fire Powell as he clashed with Powell in 2018 as well over interest rate policies but he was not fired.On Wednesday night, Trump raged against Powell and said his termination cannot come fast enough.
Calling Powell “too late and wrong”, Trump said he should lower the interest rates now, though it is too late.
Earlier on Wednesday, Powell said the level of the tariff increases announced so far is significantly larger than anticipated and it will cause “higher inflation and slower growth.” US stocks tumbled as Powell spoke. Powell said there was no immediate need to cut interest rates.
Trump’s post came shortly before the European Central Bank cut interest rates for the seventh time in eight meetings to soften the impact of Trump’s trade war. The ECB said the outlook for growth has “deteriorated owing to rising trade tensions.”
But can Trump fire Powell?
According to Marketwatch.com, the market doesn’t expect Powell to be fired. On the prediction market Polymarket, the odds that Trump will remove Powell this year rose as high as 19 cents on the dollar, up slightly from 16 cents.
On several occasions, Powell said that it is not permitted under the law for the president to fire him.
The Federal Reserve Act states that members of the Federal Reserve Board, including the chairman, can be removed by the president “for cause,” which courts have interpreted as misconduct, inefficiency, or malfeasance—not mere policy disagreements or personal dislike. There is no explicit statute clarifying whether a president can remove the Fed chair specifically, and no president has ever attempted to do so.
Attempting to fire Powell would likely trigger significant market volatility, as seen in 2018 when stocks plummeted amid rumors of Powell’s removal. Legally, Trump’s ability to fire Powell is highly constrained, requiring a “for cause” justification that would likely fail in court unless Powell committed clear misconduct.
