Trump is studying how to remove Fed Chair Jerome Powell, economic adviser says

President Trump and his administration are currently exploring the possibility of removing Federal Reserve Chair Jerome Powell from his position, as stated by National Economic Council Director Kevin Hassett. Despite being appointed by the president and confirmed by Congress, the Federal Reserve chair holds an independent role. Powell was initially nominated by President Trump in 2017 and was later renominated by President Biden in November 2021 to serve another 4-year term, which concludes on May 15, 2026.

“The President and his team will continue to deliberate on this matter,” Hassett mentioned during a press briefing when questioned about the likelihood of Powell’s removal. President Trump recently criticized Powell in a social media post, asserting that the Fed should be reducing interest rates and expressing his desire for Powell’s swift termination.

During a speech earlier in the week, Powell cautioned about the potential consequences of the Trump administration’s trade war, warning of a scenario where a combination of rising inflation and sluggish growth could lead to stagflation. He also reiterated the central bank’s decision to maintain interest rates at their current levels, prompting further backlash from President Trump.

While President Trump has indicated his dissatisfaction with Powell and his readiness to remove him from office, the legal constraints surrounding the Federal Reserve chair’s position make it a challenging task. Powell has made it clear that he would not voluntarily step down if requested by the president, emphasizing that presidents lack the authority to dismiss or demote the Fed chair.

Despite these legal barriers, recent actions taken by President Trump to dismiss Democrats from various regulatory bodies raise concerns about the potential ousting of Powell. However, even if Powell were to be replaced, it is crucial to note that the Federal Open Market Committee (FOMC) ultimately determines interest rate decisions, not solely the Fed chair.

Speculation suggests that Fed governor Kevin Warsh is being considered as a possible replacement for Powell. Warsh, a former executive at Morgan Stanley and a nominee of President George W. Bush, is known for his hawkish stance on interest rates. While Warsh is highly respected, he has advised President Trump to allow Powell to fulfill his term. The decision to replace Powell with Warsh could potentially impact the Fed’s approach to monetary policy.

As the debate over Powell’s future continues, the implications of this potential change within the Federal Reserve remain uncertain. It is essential to monitor developments closely to understand the impact on economic policies and financial markets.