President Trump threatens to fire Federal Reserve Chair Jerome Powell as stock markets tumble due to his refusal to cut interest rates, raising questions about the independence of America’s central bank.
Key Takeaways
- President Trump criticized Federal Reserve Chair Jerome Powell for not lowering interest rates while European central banks are cutting theirs
- Trump believes Powell’s reluctance to lower rates is causing market weakness and labeled Powell’s report a “complete mess”
- Powell defended the Fed’s independence, stating decisions are made based on economic data, not political pressure
- Despite Trump’s threat to terminate Powell, the Fed Chair maintains the President lacks the authority to remove him
- Powell warned that higher tariffs from the Trump administration could potentially lead to inflation and job losses
Trump Calls for Powell’s Removal
President Donald Trump has publicly called for the termination of Federal Reserve Chairman Jerome Powell, citing his refusal to cut interest rates as the cause of recent stock market declines. The criticism comes as market volatility increases and concerns about economic stability grow. Trump pointed to the European Central Bank’s decision to reduce rates, suggesting that Powell’s hesitancy puts the United States at a competitive disadvantage. The President’s comments have reignited debate about the relationship between the White House and the Federal Reserve, an institution traditionally operating independently from political influence.
Trump’s frustration was evident in his statements where he described Powell’s economic report as a “complete mess” and accused the Fed Chair of consistently being “too late” in making critical monetary policy decisions. Trump, who initially nominated Powell in 2017 before his renomination by President Biden in 2021, has a history of criticizing Powell’s leadership at the Federal Reserve. Powell’s current term is set to run until May 2026, creating potential tension with the Trump administration for the foreseeable future.
Why is the #US stock market falling?
While Trump’s #tariffs are the biggest and most immediate trigger for the sharp selloff in the US stock market, several other key factors also appear to have contributed to the downtrend on Wall Street.
1. Trade war jitters:
Trump's… pic.twitter.com/vPJmWjfQDG
— Markets Today (@marketsday) April 5, 2025
Powell Defends Federal Reserve Independence
In response to the President’s criticism, Powell has firmly defended the independence of the Federal Reserve, emphasizing that monetary policy decisions are made based on economic data and analysis rather than political considerations. Powell’s stance highlights the traditional separation between politics and central banking that has been a cornerstone of American economic policy. The Fed Chair has maintained that this independence is crucial for making sound monetary decisions that serve the long-term interests of the American economy.
“Generally speaking, Fed independence is very widely understood and supported in Washington, in Congress, where it really matters,” Jerome Powell said.
Powell has explicitly rejected the notion that political pressure influences Federal Reserve decisions. He has stated that the Fed’s mandate is to achieve its dual goals of maximum employment and price stability, and that all decisions are made with these objectives in mind. This commitment to data-driven policy has been Powell’s consistent response to criticism from both sides of the political spectrum, highlighting the Fed’s role as an independent economic institution.
Economic Policy Disagreements
The clash between Trump and Powell extends beyond interest rates to broader economic policy differences. Powell has expressed concerns that higher tariffs proposed by the Trump administration could potentially lead to increased inflation and job losses, justifying his cautious approach to interest rate adjustments. This analysis puts the Fed Chair at odds with Trump’s trade policies, which have emphasized protecting American industries through tariffs on foreign goods.
“We’re never going to be influenced by any political pressure. People can say whatever they want. That’s fine with — that’s not a problem, but we will do what we do strictly without consideration of political or any other extraneous factors,” said Jerome Powell.
Despite Trump’s public threats to terminate Powell’s chairmanship, legal experts note that the President’s authority in this matter is limited. Powell has publicly stated that he believes the President does not have the legal authority to remove him from his position, reinforcing the structural independence of the Federal Reserve from executive control. This standoff represents a significant moment in the ongoing relationship between the Federal Reserve and the White House, with potential implications for monetary policy and economic stability.
