Trump Has Declared War on the Federal Reserve

The actions of the Federal Reserve have traditionally been independent and outside the realm of politics. According to the Fed’s website, while the Fed is “ultimately accountable to the public and the Congress,” neither the president nor Congress tells the Fed what to do.

In addition, the central bank’s funding does not come from the Congressional budgeting process, but from “interest on government securities that it has acquired through open market operations.” The Fed’s mandates are ensuring maximum employment and stable prices, and are not meant to “become subject to political pressures that could lead to undesirable outcomes.”

Presidents have traditionally, therefore, not publicly mused about threatening to remove the current Fed chairman.

As with so many things, though, Donald Trump doesn’t see it that way.

Trump Says Powell “Too Late and Wrong”

On Thursday, the president took to Truth Social, and dubbed Federal Reserve Chairman Jerome Powell “Too Late,” presumably for waiting too long to lower interest rates, in comparison to the European Central Bank. He had said something similar in early April, shortly after his ill-fated “Liberation Day” announcement of new tariffs around the world.

He also implied that he hopes for Powell to be removed as Federal Reserve Chairman.

“Powell’s termination cannot come fast enough!,” the post said.

Can He Fire Him?

Presidents can decline to re-appoint a Fed chairman at the end of his four-year term. Trump did this in his first term, replacing the Obama-appointed Janet Yellen with Powell. Powell was reappointed to a second term by President Biden in 2022, and his term runs through May of 2026, so Trump could appoint a different Fed chairman then.

Whether a president can fire a Fed chairman during his term is one of those things that has never really been tested, since most pre-Trump presidents would have never thought to try to do it.

There is a legal precedent, Humphrey’s Executor v. United States, from 1935, which protects the heads of government agencies from being fired at will. That case arose from an FTC commissioner who was fired by President Franklin Roosevelt. However, a case will soon come before the Supreme Court challenging that precedent.

Per Axios, Powell was asked about this in a public appearance in Chicago this week, and answered that “I don’t think that that decision will apply to the Fed.”

Trump has challenged that sort of norm, especially in his second term, with his firing of two Democratic Federal Trade Commission commissioners as well as a member of the National Labor Relations Board.

Fighting With His Own Appointee

Trump appears to be upset that Powell, also in the Chicago speech, was critical of the president’s tariff policies, which he predicted would lead to increased inflation. He also raised the possibility of “potentially different time horizons over which those respective gaps would be anticipated to close,” over inflation, and economic growth.

This is a case of Trump getting into a feud or public disagreement with an official whom he appointed himself, which never stopped him in the past with former Attorney General Jeff Sessions or former FBI Director Christopher Wray.

Powell has been clear in the past that he would not resign if Trump asked him, and that a president firing a Fed Chairman is “not permitted under the law.”

Trump has publicly complained about Powell before, especially when he raised rates during Trump’s first term; he called him “the enemy” at one point, per CNN.

More Soft Landings?

Powell has been praised for delivering a “soft landing,” in which rate increases helped reduce (but did not eliminate) inflation during the later period of the Biden presidency, without the economy falling into recession. But Powell isn’t without his critics.

It’s likely that Trump misses the low-interest rate environment of the early days of his first term, and wishes to return to that, regardless of the consequences to the overall economy, which he may or may not entirely understand.

About the Author: Stephen Silver

Stephen Silver is an award-winning journalist, essayist and film critic, and contributor to the Philadelphia Inquirer, the Jewish Telegraphic Agency, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. For over a decade, Stephen has authored thousands of articles that focus on politics, technology, and the economy. Follow him on X (formerly Twitter) at @StephenSilver, and subscribe to his Substack newsletter