President of the United States Donald Trump has once again lashed out at Federal Reserve Chair Jerome Powell, stating that he could remove him from office at any moment. The reason for this threat is the Fed’s current policy, specifically its refusal to rapidly cut interest rates despite rising tariffs and the threat of economic slowdown. According to Senator Elizabeth Warren, if Trump succeeds in ousting Powell, it would cause a major disruption in U.S. markets.
"If I Ask Him to Leave, He Will"
Speaking to reporters at the White House, Trump directly stated that he could remove Powell from his position.
“If I ask him to leave, he will,” Trump said.
The president emphasized his disappointment with Powell's actions and said he personally conveyed his dissatisfaction to the Fed chair. Earlier, Trump wrote on social media that Powell’s resignation “can’t happen fast enough.”
When asked directly whether he truly intended to fire Powell, Trump declined to answer. However, he called Powell a “terrible” chair and accused him of preventing borrowing costs from falling. In the president’s view, inflation in the U.S. is nearly nonexistent, and interest rates should be lower.
Accusations of Playing Politics and Comparison to Europe
Trump accused Powell of “playing politics,” noting that oil, gasoline, and other commodity prices are falling. He referenced the European Central Bank, which on the same day lowered its rate by 0,25% points to 2,25%.
On social media, Trump also wrote that Powell is “always late and always wrong,” posting another harsh tirade: “Too Late Jerome gave us another typical mess yesterday.” He insisted that the Fed should have already lowered rates and must do so now.
Markets Unfazed, Economists Concerned
Despite the president’s aggressive rhetoric, financial markets barely reacted. The S&P 500 index rose 0,2% on Thursday, and the yield on two-year U.S. Treasuries increased by 3 basis points to 3,80%.
Nonetheless, economists are alarmed. Citigroup’s Chief Economist Nathan Sheets warned that pressure on the Fed’s independence could lead to a deep and prolonged recession. He stated this could erode trust in the economy and financial markets.
Tenure and Legal Constraints
Powell’s term as Fed Chair runs until May 2026, and as a member of the Board of Governors, until February 2028. U.S. law prohibits his dismissal without significant cause. Speaking recently in Chicago, Powell stated that “the independence of the Fed is enshrined in law” and that the chair can only be removed “for cause.”
He also mentioned an ongoing Supreme Court case regarding the dismissal of officials from other independent agencies, including the National Labor Relations Board and the Merit Systems Protection Board. Powell acknowledged he is closely watching the case but does not currently believe it will impact the Fed.
Congress and Treasury Respond
Democratic Senator Elizabeth Warren emphasized in an interview that Trump does not have the authority to fire Powell.
“The president has freedom of speech, but if he tries to fire him — markets will crash,” she said.
Warren reminded that even authoritarian regimes maintain the formal independence of their central banks to attract capital.
Treasury Secretary Scott Bessent previously said discussions about replacing the Fed Chair might begin in the fall. He emphasized that Fed independence is “a jewel box that must be preserved.”
Backdrop: Tariffs and Inflation
Trump’s renewed criticism of Powell coincides with the White House’s intensified tariff policy, increasing inflationary risks and complicating the Fed’s task. In his speech, Powell stressed that the Fed’s main goal is to keep inflation expectations anchored and to prevent one-time price spikes from becoming entrenched.
Meanwhile, Trump insists that tariffs are “making America rich” and that oil and food prices are falling. However, data from the past year shows food prices have increased by 2,4%, despite oil prices falling by more than 10%.
Reaction From Europe
European Central Bank President Christine Lagarde, commenting on the Fed’s actions, said she respects her American counterpart and friend Jerome Powell. She affirmed that the two central banks maintain a tradition of consultation and expressed confidence that this cooperation would continue.
This post is for informational purposes only and is not an ad or investment advice. Please do your own research making any decisions.