US President Donald Trump has intensified his public criticism of Federal Reserve Chair Jerome Powell, calling for his immediate resignation following a federal housing regulator’s call for an investigation into Powell’s recent congressional testimony. The escalating dispute underscores ongoing tensions between the White House and the Federal Reserve over monetary policy and governance.
Trump Calls for Jerome Powell Resignation
In a post on his social media platform Truth Social on Wednesday, Trump declared, “‘Too Late’ should resign immediately!!!” alongside a link to a news article detailing calls for a congressional probe into Powell’s conduct. The comments mark the latest escalation in Trump’s prolonged campaign against Powell, whom he originally nominated to head the central bank during his first presidential term.
This comes after Bill Pulte, director of the Federal Housing Finance Agency (FHFA), publicly urged Congress to investigate Powell for “political bias” and “deceptive Senate testimony,” suggesting that these grounds warrant removal “for cause.” Pulte’s demand references Powell’s recent statements disputing allegations of excessive renovation costs and lavish features at the Fed’s Washington headquarters.
Trump’s Criticism of Jerome Powell
Since his appointment in 2018, Jerome Powell has frequently been targeted by Trump, who has repeatedly lobbied for interest rate cuts to stimulate economic growth. Trump’s frustration stems from the Fed’s cautious approach to monetary easing, which he contends hampers America’s economic potential.
Despite the president’s vocal displeasure, Trump stated earlier this year that he had “no intention of firing [Jerome Powell].” However, his latest call for resignation suggests a hardening stance, possibly influenced by rising political pressure and recent controversies involving the Fed’s internal spending.
Powell himself has maintained that his tenure would not be cut short at the president’s behest. Speaking ahead of Trump’s expected return to power in January 2025, Jerome Powell emphasized that “it is not permitted under law” for the White House to force his removal. His current term, renewed by President Joe Biden, runs through May 2026.
Legal and Institutional Constraints on Removing Fed Chairs
Board members of independent federal agencies such as the Federal Reserve enjoy statutory protections aimed at preserving their institutional independence. According to a seminal 1935 Supreme Court ruling, members of such agencies may only be removed for cause, a standard that entails misconduct or legal violations rather than policy disagreements.
Legal experts note that while presidents can influence Federal Reserve policy indirectly through appointments, the law limits their capacity to dismiss sitting members without just cause. This framework is designed to shield the Fed from political interference and enable it to make decisions focused on long-term economic stability.
Nonetheless, during his first administration, Trump challenged this convention by firing several independent regulators, prompting legal battles over separation-of-powers issues. Observers point out that any attempt to remove Powell without a substantiated cause could trigger significant political and legal challenges.
Jerome Powell Remarks on Tariffs and Monetary Policy
Jerome Powell recent testimony before the Senate sparked additional controversy. During a central bankers’ conference in Portugal, he stated that Federal Reserve interest rates “would have been cut already” were it not for the impact of Trump’s tariffs on global trade.
When questioned if US rates might have fallen further absent the administration’s sharp tariff increases, Powell responded, “I think that’s right,” linking trade policy decisions to monetary policy constraints. This candid acknowledgement appeared to contradict the White House’s public stance and likely fueled Trump’s renewed criticism.
An official Federal Reserve spokesperson declined to comment on Trump’s demands when approached by the BBC.
Implications for US Monetary Policy and Governance
The confrontation between Trump and Jerome Powell spotlights deeper debates over central bank independence in an era of political polarization. The Federal Reserve traditionally balances objectives for inflation control and job growth, with decisions made on technical economic criteria rather than political expediency.
According to Dr. Sarah Bloom Raskin, former Fed governor and professor of law at Duke University, “Attempts to unseat Federal Reserve officials based on policy disagreements undermine the institution’s credibility and could destabilize markets.”
Financial markets are sensitive to perceptions of Federal Reserve independence. Any signs of political interference may heighten volatility and weaken investor confidence. Economists caution that politicizing the Fed’s leadership risks impairing its ability to respond effectively to economic challenges such as inflation, recession risks, and global market shocks.
Broader Context: Federal Reserve and Political Pressure
The Federal Reserve’s independence has been a bipartisan priority since the mid-20th century, intended to safeguard the US economy against short-term political pressures. Historically, Fed chairs from Paul Volcker to Janet Yellen have navigated political headwinds while maintaining autonomy.
However, the Trump administration’s outspoken criticism broke with traditional norms, reflecting growing tensions between populist political forces and technocratic institutions.
The question of whether Trump’s latest calls will result in formal congressional inquiries or legal moves remains open. Congress has authority to investigate federal officials but must find grounds consistent with “for cause” removal criteria.
Chair Jerome Powell ability to continue his role will likely depend not only on legal protections but also on political dynamics unfolding in an increasingly divided Washington.
Looking Ahead: Stability and Policy Prospects
Jerome Powell term extends until mid-2026, offering an interlude from immediate risk of forced departure. However, the intensifying public clashes signal potential challenges ahead for Fed leadership.
For now, financial markets and policy analysts will monitor how institutional checks and balances hold amid mounting pressures. The Federal Reserve’s next moves on interest rates, combined with evolving political relations, will be critical for the US economic outlook.
As inflation persists above target levels and geopolitical tensions influence markets, Powell’s stewardship remains under close scrutiny. Future developments in this high-profile conflict could influence debates over central bank governance and the delicate balance between economic policy and political oversight.
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