Since President Donald Trump was elected to serve a second term last month, there has been significant speculation about whether he would fire Federal Reserve Chairman Jerome Powell upon assuming office.
Although Trump appointed Powell to the post during his first term, he has since expressed frustration and disagreement with the central bank’s decisions.
As The Hill reported, Trump has decided not to fire Powell, whose term is set to end in 2026:
“No, I don’t think so. I don’t see it,” Trump told Kristen Welker on “Meet the Press.”
“I think if I told him to, he would. But if I asked him to, he probably wouldn’t. But if I told him to, he would,” Trump added.
Asked if he had plans to fire Powell, Trump said, “No, I don’t.”
Powell, whose term ends in 2026, told reporters last month he would not step down from his position if Trump asked. Powell added that it is “not permitted under the law” for the president to fire or demote him or any of the other Fed governors with leadership positions.
The topic has been discussed extensively on social media over the past few weeks:
Fox News broke down the rift between Trump and Powell, going on to refute the claim that the Fed chair is beyond the president’s influence:
In his first term, Trump regularly called for lower rates to stimulate economic growth, and once even suggested negative interest rates. During this year’s election campaign, Trump outlined ambitious plans for government spending on new programs (on some estimates, costing as much as $15.5 trillion over 10 years), even while promising a variety of tax cuts that might increase the deficit further.
Although the tariffs Trump is proposing might offset those revenue losses to some extent, and substantial savings in governmental efficiency might possibly be achieved as Elon Musk takes a knife to the bureaucracy, Trump’s proposals would likely require large amounts of government borrowing. That borrowing in turn might create serious inflationary pressures while exacerbating government’s debt costs.
Trump would likely demand that the Fed drop rates further – the success of his entire economic program seems to depend on it. But Powell and his Fed colleagues might resist Trump’s demands for a more relaxed, growth-oriented monetary policy after their failure to stop the once-in-a-generation of the Biden presidency. And if Powell resists, then Trump may want to fire him. The legal question is whether he can.
Powell is not only politically unwise to claim independence from presidential control, but he is also legally mistaken. Trump can fire Powell under the laws that created the Federal Reserve as well as under the Constitution. The legal question has two aspects, one statutory, the other constitutional.
Powell is both the chairman of the Fed’s board of governors and a member of the board. Under the applicable statute, members of the board hold office for a term of 14 years “unless sooner removed for cause.” The chairman is to be appointed by the president, with Senate advice and consent, from among the board members, for a term of four years.
Significantly, the statute provides no express protection against removing Powell as chair – though under the statute, Trump would need “cause” to remove him from the board. While there may be an unwritten assumption and a longstanding custom that presidents may not remove Fed chairs from their position, nothing in the text of the statute prohibits them from doing so. Should Trump wish to demote Powell from Fed chairman to Board member, he can.
Here’s Ron Paul’s characteristically anti-Fed take on the matter:
And here’s a clip from earlier this year during which Trump makes the case against Powell:
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