President Donald Trump renewed his threat to fire Federal Reserve Chair Jerome Powell, escalating a standoff with the central bank over interest rates and economic policy. Speaking from the Oval Office Thursday, Trump criticized Powell for not cutting rates and declared, “If I want him out, he’ll be out of there real fast, believe me.”
Trump’s comments came after a post on his social media platform called Powell’s removal overdue, stating, “Powell’s termination cannot come fast enough!” Though Powell was originally appointed by Trump in 2017 and reappointed by President Joe Biden in 2022, the Fed chair emphasized in public remarks that he would not step down voluntarily, noting that Federal Reserve independence is protected by law and that he can only be removed “for cause.”
The conflict centers on interest rates, which the Fed raised sharply in 2022 and 2023 to combat inflation. Although inflation has since dropped to 2.4%, just above the Fed’s 2% target, Powell and other policymakers are holding off on further rate cuts. They cite ongoing economic uncertainty—especially due to Trump’s newly implemented tariffs, including a sweeping 10% tax on all imports and a 145% tariff on Chinese goods.
Powell warned Wednesday that these tariffs are likely to reignite inflation, making the case for keeping rates higher. He reaffirmed the Fed’s independence and stated the central bank will act in the interest of all Americans, not political pressure. Trump, however, accused Powell of “playing politics” and blamed him for rising rates and economic strain.
The Supreme Court is currently reviewing a case that could impact the president’s authority to fire officials at independent agencies. Trump’s legal team has downplayed its relevance to the Fed, though Powell indicated he is closely watching the ruling.
Meanwhile, economic warnings are mounting. Wall Street firms such as Goldman Sachs have raised the likelihood of a recession, citing Trump’s tariffs as a key risk. The Budget Lab at Yale University estimated the cost of these policies could equal a $4,900 loss per average household due to inflationary pressures.
Despite past pledges to let Powell finish his term, Trump’s public frustration and economic agenda may test the limits of Federal Reserve independence—potentially setting the stage for a historic showdown between the executive branch and the central bank.
