President Donald Trump has reignited a political firestorm by suggesting he could fire Federal Reserve Chair Jerome Powell, citing frustration over interest rates and blaming Powell for not cutting them. “If I want him out, he’ll be out of there real fast, believe me,” Trump declared during a press briefing with Italian Prime Minister Giorgia Meloni at the White House.
Trump’s remarks followed a heated post on his social media platform, where he said Powell’s “termination cannot come fast enough.” Though Powell was originally appointed by Trump in 2017, he was reappointed by President Biden in 2022 for a term that runs through May 2026. Powell responded firmly, asserting, “We’re not removable except for cause. Our independence is a matter of law.”
The president’s dissatisfaction stems from the Fed’s decision to hold interest rates steady despite falling inflation—down from 9.1% in 2022 to 2.4% last month, close to the Fed’s 2% target. Trump argues the U.S. faces “essentially no inflation” and accuses Powell of “playing politics.”
However, Powell and other Fed officials point to Trump’s sweeping new tariffs—including a 10% tax on all imports and a 145% levy on Chinese goods—as a destabilizing factor likely to increase inflation and uncertainty. Powell reiterated that the Fed will act based on data, not political influence, emphasizing that “we’re never going to be influenced by any political pressure.”
This confrontation echoes past political meddling with the Fed, notably President Nixon’s pressure in the 1970s, which many economists believe worsened long-term inflation. Wall Street continues to back Fed independence, viewing it as essential to maintaining economic stability.
Meanwhile, the U.S. Supreme Court is reviewing a case that could redefine presidential powers over independent agency leaders. While Trump’s legal team says the case doesn’t involve the Fed directly, the outcome could have broad implications.
Adding to the turmoil, Trump’s tariff strategy—intended to rebalance trade deficits—has triggered economic headwinds. Yale’s Budget Lab estimates that tariff-driven inflation could cost the average U.S. household $4,900. Wall Street analysts, including those at Goldman Sachs, now see rising risks of a recession. Consumers, too, are growing pessimistic about job prospects and future price stability.
Though Trump’s economic team has promised no political interference with the Fed, his recent rhetoric suggests otherwise—setting the stage for a possible constitutional clash over central bank autonomy.