Can Trump Fire Powell? Looking at the Truth about Jerome Powell's Termination

In the escalating battle between President Donald Trump and Federal Reserve Chair Jerome Powell, questions are mounting over the future of the central bank’s independence. 

Trump has openly derided Powell as a "major loser" and has repeatedly pressed him to slash interest rates amid persistent inflation concerns. 

With economic growth and consumer confidence hanging in the balance, Trump’s threats to remove Powell have sparked legal, financial, and constitutional debates across Washington and Wall Street. 

Can Trump really fire the Fed chair? And if so, what would that mean for the U.S. economy?

Here’s what to know about the growing tension — and the truth about whether Powell’s job is really on the line.

The Legal Framework: Can a President Fire a Fed Chair?

At the heart of this controversy is a constitutional question: Can President Trump fire Jerome Powell? The answer isn’t straightforward. Federal Reserve board members, including the chair, are appointed to fixed terms and are legally protected from removal without cause. 

This principle was upheld in the landmark 1935 Supreme Court decision Humphrey’s Executor v. United States, which ruled that Congress could restrict the president’s power to remove leaders of independent agencies.

This legal safeguard is meant to preserve the independence of key regulatory institutions like the Federal Reserve, allowing them to make long-term decisions insulated from political interference. 

Under Section 10 of the Federal Reserve Act, a board member can only be removed “for cause,” typically interpreted as malfeasance, neglect of duty, or inefficiency — a high bar to meet.

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Trump’s Criticism of Powell and the Push for Lower Interest Rates

Trump’s frustration with Powell centers on the Federal Reserve’s stance on interest rates. Despite cooling inflation, the Fed has opted to maintain its benchmark rate between 4.25% and 4.5% — the highest level since 2007. 

Trump argues this is a drag on the economy, stifling growth and hurting consumers and businesses with higher borrowing costs.

The former president has sharply contrasted Powell’s caution with the European Central Bank’s decision to cut interest rates, arguing that Powell is unnecessarily holding the U.S. economy back. In his words, Powell is “Mr. Too Late” and “a major loser” who should act “NOW” to lower rates.

While Powell has acknowledged the impact of Trump’s tariffs on inflation and growth, he has maintained the Fed’s commitment to data-driven decisions and long-term economic stability.

The Supreme Court Could Shift the Balance

Trump’s latest legal maneuver could redefine the boundaries of presidential power. The Supreme Court is currently reviewing Trump’s emergency petition to uphold his firings of officials from the National Labor Relations Board and the Merit Systems Protection Board — both independent agencies.

If the high court rules in Trump’s favor, it could undermine the Humphrey’s Executor precedent and grant broader authority to the president to remove leaders of independent agencies, including the Fed. 

Trump’s allies argue that if he can legally fire one board member, he can fire any — including Powell.

Legal scholars are divided. While some believe the court will uphold long-standing protections, others suggest a conservative majority might adopt the late Justice Antonin Scalia’s view that presidents must have full control over the executive branch — even over agencies like the Fed.

Read also: Is Jerome Powell More Dovish? Looking at the Latest Speech from the Fed's Chair

Powell’s Position: Steadfast Amid Political Pressure

Despite Trump’s aggressive stance, Powell has made it clear he has no intention of stepping down. He was first appointed by Trump in 2017 and later re-nominated by President Biden in 2021. His current term runs through May 2026.

Powell has repeatedly affirmed that his position is protected by law and not subject to presidential whims. In public statements, he’s remained focused on the Fed’s mandate: stable prices and full employment — not political pressure.

Fed officials and some lawmakers, including Republican Sen. John Kennedy, have voiced support for Powell’s independence, warning that any erosion of the Fed’s autonomy could lead to higher inflation and economic instability.

Market Reaction: A Warning Shot from Wall Street

Trump’s repeated calls to fire Powell have rattled markets. Following a recent Truth Social post criticizing Powell, the S&P 500, Nasdaq, and Dow Jones all fell by more than 2%, reflecting investor anxiety about potential political interference in monetary policy.

Wall Street fears two risks: that Powell may overstay rate hikes to prove his independence, or that Trump’s actions could destabilize investor confidence in the Fed altogether. 

The central bank’s credibility, built on its political neutrality, is a cornerstone of global economic trust.

Nigel Green, CEO of the deVere Group, warned that undermining Powell “sparks concerns over central bank independence” and could lead to long-term financial instability.

A Legal Precedent Under Pressure

Historically, the courts have supported the idea that Congress can insulate independent agency officials from at-will presidential removal. 

However, the landscape is shifting. Recent court rulings — including a 2020 decision that gave Trump authority to fire the head of the Consumer Financial Protection Bureau — suggest the Supreme Court might be willing to erode these protections.

Legal experts like Yale’s William English and Duke University’s Jeff Powell say that while precedent supports the Fed’s independence, the current court may reinterpret these boundaries — especially under pressure from the executive branch.

As Powell himself said, the Fed is “monitoring it carefully.”

The Bottom Line: A High-Stakes Legal and Political Gamble

While Trump cannot fire Powell outright — at least not under current law — the Supreme Court’s pending decisions could open the door for such a move. 

For now, Powell remains protected, but his position is at the center of a legal showdown that could redefine the balance of power between the White House and the country’s most powerful financial institution.

Whether or not Trump succeeds in ousting Powell, the mere threat could have lasting effects on central bank credibility, investor confidence, and the future of U.S. monetary policy.

FAQ

1. Can a U.S. President fire the Federal Reserve Chair?

Not directly. The Federal Reserve Chair is a member of the Fed’s Board of Governors, who are appointed to 14-year terms and can only be removed “for cause” — such as neglect of duty or malfeasance — under the Federal Reserve Act. This is designed to preserve the Fed’s independence from political influence.

2. Has the Supreme Court ruled on this issue before?

Yes, in Humphrey’s Executor v. United States (1935), the Supreme Court upheld that Congress can protect the heads of independent agencies from at-will removal by the president. This precedent supports Powell’s job security — at least for now.

3. Why is Trump targeting Powell?

Trump has criticized Powell for maintaining high interest rates, which Trump argues hurt the economy and his potential re-election bid. He wants the Fed to cut rates, but Powell has resisted due to ongoing inflation risks.

4. Could Trump succeed in firing Powell anyway?

Only if the Supreme Court overturns or reinterprets the Humphrey’s Executor precedent — a possibility under the court’s current conservative majority. Trump has filed emergency petitions in other agency-related cases that could pave the way for broader presidential power over independent agencies.