- Trump is pressuring Fed Chair Powell to cut interest rates but can’t legally fire him without cause.
- Powell warns tariffs could lead to both inflation and slow growth, complicating Fed decisions.
- The White House fears firing Powell could destabilize markets already shaken by trade tensions.
The tension between President Donald Trump and Federal Reserve Chair Jerome Powell is boiling over—again. Treasury Secretary Scott Bessent has reportedly warned White House insiders that firing Powell could rattle financial markets already shaky from tariff turmoil and investor nerves.
Powell’s Job Is Safe, But the Pressure’s Rising
Despite Trump’s Truth Social outburst on Thursday saying Powell’s “termination cannot come fast enough,” legal and political roadblocks keep Powell pretty secure—for now. Under U.S. law, Fed governors can only be removed “for cause,” which means serious misconduct, not just disagreeing with the president over interest rates. Trump knows that, but he’s still venting, and insiders say it’s more about pressuring Powell than firing him.
Powell Stays the Course as Tariffs Cloud the Outlook
At an event in Chicago this week, Powell didn’t flinch. He made it clear the Fed’s in a tricky spot—facing the possibility of both inflation and slower growth thanks to the administration’s trade war. While Trump pushes for rate cuts, Powell says the central bank is watching the data and in no rush to change its stance unless things get worse.
Legal Boundaries and Political Theater
Trump’s threat to fire Powell isn’t new. He floated the idea back in 2018 when the Fed raised rates multiple times. Markets panicked, and Trump backed off. This time, the legal challenge could go all the way to the Supreme Court, where Trump is already trying to expand presidential authority to fire heads of independent agencies. Whether that’ll apply to the Fed remains a question even Powell isn’t sure about.
Trump Praises ECB, Pressures Fed
Interestingly, Trump took a moment to applaud the European Central Bank for cutting rates again, something he believes Powell should’ve done already. “He should certainly lower them now,” Trump insisted. With just a year left in Powell’s term, though, some close to the White House say Trump may opt to ride it out instead of going to war over it.
