Former President Donald Trump has recently flared up a long-simmering feud with Federal Reserve Chair Jerome Powell. He charges Powell with “playing politics” for not cutting interest rates. This unprecedented public confrontation raises critical questions about whether or not Trump is now able to fire Powell. His team is now deep into this issue.
The relationship between Trump and Powell has been frosty for some time. Recent comments from Trump suggest that he is going further — and getting nastier. On Powell himself, he said that he has the power to fire Powell “very quickly” if he ever decides to do that. We should at least be thankful that Trump is using his bully pulpit to complain about the Fed’s easy money. He thinks it’s holding back economic development.
In his most recent letter Powell strongly maintains that the statute in question prevents his removal in retaliation for the statements made by Trump. He plans to complete his term, which ends in May 2026. Inflation and the Fed He remains undeterred by current legal case at the U.S. Supreme Court that threatens to complicate his role at the Fed. The action centers on Trump’s ability to remove two Democrat-aligned figures from national labor relations boards.
Everybody has their eye on the Supreme Court case. It might decide whether or not Trump succeeds at removing Powell. This leads us to the second and more important way that Powell just gave a potential lifeline to the Fed’s future independence. He has made clear that he will not step down if Trump tells him to.
Kevin Hassett, an advisor and former Chairman of the Council of Economic Advisers under Trump, commented on the situation, emphasizing that the president and his team will continue to evaluate their options regarding Powell’s status.
“The president and his team will continue to study that matter.” – Kevin Hassett
Hassett reflected on his previous views expressed in his 2021 book, “The Drift: Stopping America’s Slide to Socialism,” where he argued that firing Powell during Trump’s first term would have damaged the reputation of the Fed and potentially destabilized the economy. He did make it clear that the times have changed and that vigorous new legal analyses might lead to a rethinking of their strategy.
“I think that at that time, the market was a completely different place. And, you know, I was referring to legal analysis that we had back then. And if there’s new legal analysis that says something different, then we need to rethink our response.” – Kevin Hassett
As this situation develops, both Trump and Powell remain central figures in discussions surrounding U.S. monetary policy and the broader economic landscape. Their bitter, personal feud has disastrous consequences. It shows how that political influence is in tension with this independence through the established autonomy of Federal Reserve leadership.