Jerome Powell has recently insisted that he cannot be fired without cause, but legal experts highlight ambiguities in the law. Analysts suggest that Donald Trump’s criticisms may aim to pressure the Fed to lower rates, though outright removal would face significant hurdles, including legal battles and market risks. Most observers believe Trump is more likely to influence policy than force a leadership change, according to a Barron’s report.
Can a sitting President Remove the Fed Chair?
The question of whether a U.S. president can fire a Federal Reserve chair has resurfaced amid speculation about Donald Trump’s potential efforts to challenge Jerome Powell’s leadership. Powell, appointed by Trump in 2017 and later reconfirmed by President Biden until 2026, has clashed with Trump over the Fed’s inflation policies. During a recent press conference, Powell asserted that the law does not permit a president to dismiss a Fed chair without justification, emphasizing his refusal to resign if pressured.
Legal experts like Russel Morgan of The Morgan Legal Group note the ambiguity in statutes governing Fed leadership removal. Under the 1913 Federal Reserve Act, the central bank operates independently from political interference, with officials protected from dismissal over policy disagreements. A 1930s Supreme Court ruling adds that removing a Fed chair would require proof of “inefficiency, neglect of duty, or malfeasance.” Morgan explained that any attempt to oust Powell would likely involve a lengthy process, including a Senate-led investigation to establish valid grounds, as per Barron’s report.
Trump’s criticism of the Fed centers on his desire for lower interest rates to stimulate economic growth—a theme echoed during his 2024 campaign. Reports suggest former Trump advisors have explored proposals to increase presidential oversight of Fed decisions, though experts argue this conflicts with the institution’s designed independence. Columbia Business School’s Brett House speculated that Trump’s rhetoric may aim to sway Powell toward rate cuts rather than force a leadership change.
More on the Powell vs Trump Standoff
Market analysts, including Approved Funding’s Shmuel Shayowitz, doubt Trump would risk destabilizing financial markets by aggressively targeting Powell. With Powell’s term ending in 2026, Shayowitz suggested Trump might wait to appoint a successor rather than ignite a legal battle. Others highlight the economic risks of undermining Fed credibility, which could spook investors and complicate debt management.
A Trump campaign spokesperson declined to comment on specific plans, stating only that personnel decisions would be announced in time. For now, Powell’s stance and legal safeguards signal a high-stakes standoff—one balancing presidential influence against the Fed’s century-old mandate to operate free of political pressure. While Trump’s threats keep speculation alive, most experts believe backroom pressure, not a public fight, will define this clash.
