President Trump and his team are studying whether firing Federal Reserve Chair Jerome Powell is an option, according to National Economic Council Director Kevin Hassett.
Though appointed by the president and approved by Congress, the Federal Reserve chair is an independent role. Powell was nominated to lead the Fed by Mr. Trump in 2017 and was renominated to serve another 4-year term by President Joe Biden in November 2021. Powell’s term as Fed chair ends May 15, 2026.
“The President and his team will continue to study that matter,” Hassett said when asked during a press gaggle on Friday if removing Powell from his post was likely.
Mr. Trump on Thursday took aim at Powell in a social media post, writing that the Fed should be cutting interest rates, and adding that his “termination cannot come fast enough.”
In a speech delivered on Wednesday, Powell warned that the Trump administration’s trade war could result in a combination of higher inflation and slower growth. That economic mix describes stagflation — a mashup of “stagnation” and “inflation” that characterizes periods when economic growth falters while price hikes accelerate.
On Wednesday, Powell also reiterated that the central bank plans to hold interest rates steady for now, also sparking pushback from Mr. Trump.
“He’s too late. Always too late. A little slow and I’m not happy with him. I let him know it and — if I want him out, he’ll be out of there real fast, believe me,” Mr. Trump said Thursday at the White House.
Can Mr. Trump fire Powell?
A landmark ruling by the Supreme Court in 1935 affirmed Congress’ authority to create independent federal agencies whose board members could only be forced out before their terms expired “for cause.”
After Mr. Trump was elected in November, Powell said he wouldn’t step down if asked by the president, who has previously criticized his performance. Powell has also noted that presidents may not legally fire or demote the Fed chair.
But Mr. Trump this week fired two Democrats on the board of another financial regulator, the National Credit Union Administration, reported Reuters on Wednesday. And in March, the White House dismissed two Democratic members of the Federal Trade Commission, which historically has operated as an independent, bipartisan commission.
Even if Mr. Trump were able to remove Powell, it’s not clear that doing so would change the direction of the central bank’s decisions on interest rates. Those calls are made by the Federal Open Market Committee, or FOMC — a 12-member group tasked with setting monetary policy — and not at Powell’s discretion.
Who would replace Powell?
Fed governor Kevin Warsh, 55, is a former Morgan Stanley executive who was nominated to the Fed’s board of governors by President George W. Bush.
Mr. Trump is considering selecting Warsh as Powell’s replacement, the Wall Street Journal reported on Thursday. However, Warsh has advised Mr. Trump to allow Powell to remain through the end of his term, the publication added.
Widely respected, Warsh is considered to be even more hawkish — or willing to allow interest rates to remain high to control inflation — than Powell, according to a January blog post by Harvard economist Kenneth Rogoff.