It’s not new to hear of President Donald Trump being upset with Fed Chair Jerome Powell. Trump has repeatedly pressured Powell to cut interest rates, but Powell doesn’t seem to budge. Now, however, the fire is intensifying as Trump is threatening to fire Jerome Powell.
Trump Threatens to Fire Fed Chair Jerome Powell
“Powell’s termination cannot come fast enough!” Trump said in a social media post Thursday. Later that day, Trump said “if I want him out, he’ll be out of there real fast, believe me.” This comes just one day after Powell warned that the Federal Reserve faces a difficult balancing act. With tariffs driving up prices while also weakening the economy, he said the Fed could be forced to choose between fighting inflation or supporting growth—two goals that might be at odds in a trade war scenario.
Despite Trump’s claims, Powell states that Trump can’t break the rules as the Fed chair can’t simply be fired over policy disagreements. “We’re never going to be influenced by any political pressure,” Powell said. “People can say whatever they want. That’s fine. That’s not a problem. But we will do what we do strictly without consideration of political or any other extraneous factors.”
History Between Powell and Trump
This isn’t the first time Trump and Powell have clashed. Trump first appointed Powell in 2018, then quickly soured on him during a 2019 trade war, accusing Powell of not cutting rates fast enough. Powell was reappointed in 2022 by President Biden with massive support. Trump’s frustration now seems to stem from Powell’s refusal to preemptively slash rates again. On Thursday, Trump once again pressured the Fed: “Powell should have lowered interest rates, like the ECB, long ago, but he should certainly lower them now.”
The Fed has kept rates steady so far this year. Powell and other central bankers are cautious—cutting rates might boost the economy in the short term, but it could also make inflation worse, especially when higher prices are being driven by supply shocks like tariffs. Powell himself acknowledges that “there’s a tension there”.
Trump’s threats certainly have alarmed economists and investors, who view the Fed’s independence as vital to the US government system. Eswar Prasad, a Cornell University economist, warned: “Trump is taking the cudgel to elements of the U.S. institutional framework that have long been seen as free from direct political interference. This could have serious long-term ramifications for the value and broad use of the dollar in global markets.”
With tensions rising, others have gotten involved as well. Treasury Secretary Scott Bessent tried to calm the waters earlier this week, calling the Fed’s independence a “jewel box that has got to be preserved.” At the moment, Powell’s term runs through May 2026, and Trump has said he won’t replace him early. But as the pressure from tariffs grows and campaign season heats up, that promise may not hold.
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