In a statement that grabbed headlines but calmed markets, former President Donald Trump said on Monday that he has no intention of firing Federal Reserve Chair Jerome Powell, even as he ramped up pressure on the central bank to cut interest rates ahead of the 2024 election.
Speaking during a media event, Trump addressed recent speculation and market jitters caused by his repeated criticisms of Powell. “I have no plans to fire him,” Trump said. “But I do believe the Fed is acting too slowly, and that hurts our economy.”
Background: Tensions Between Trump and Powell
Tensions between Trump and Powell are nothing new. During his presidency, Trump frequently criticized Powell for not lowering interest rates fast enough, especially during periods of market volatility and trade negotiations with China. Trump’s frustration with the Fed boiled over in recent weeks, when he referred to Powell as “Mr. Too Late” and “a disaster” in interviews and campaign rallies.
These comments had real economic consequences. Markets reacted nervously to the possibility of Powell being ousted, with stocks dropping and investors fleeing to safer assets amid the uncertainty about the Fed’s independence.
However, on Monday, Trump appeared to walk back those attacks, at least partially, saying that while he strongly disagrees with Powell’s “timid” approach to interest rates, he respects the legal process and will not remove him from office.
Can a President Fire the Fed Chair?
The question of whether a U.S. president can fire the Fed chair has long been a legal gray area. According to the Federal Reserve Act, governors can only be removed “for cause,” a standard that traditionally does not include policy disagreements.
Jerome Powell himself has addressed this issue, stating that the law is clear: a president cannot remove a sitting Fed chair simply because of differing views on interest rate policy. Doing so would undermine the institution’s independence — a key pillar of its credibility in the eyes of global markets.
Despite this, Trump’s rhetoric has led to renewed concerns that political interference could erode trust in the central bank.
Trump’s Economic Agenda: Rate Cuts and Trade Deals
In his latest remarks, Trump doubled down on his belief that the Fed should be lowering interest rates to support the economy. “We need to cut rates — and we need to do it now,” he said. “Other countries are doing it. We’re falling behind.”
He linked his criticism of the Fed to broader economic goals, including trade. Trump expressed optimism about finalizing a new trade agreement with China, one that could reduce tariffs “substantially.” However, he made it clear that tariffs would not disappear altogether. “We need leverage,” he said, referring to the tariffs. “But a good deal will bring those down significantly.”
Mixed Signals for Investors
While Trump’s clarification that he won’t fire Powell provided a brief sense of stability, his ongoing criticism of the Fed, along with his aggressive tariff policies, continue to cause unease among investors and economic analysts.
The Federal Reserve has so far held interest rates steady in its 2025 meetings, citing lingering inflation and global economic uncertainty. Meanwhile, the International Monetary Fund (IMF) recently downgraded global growth forecasts, warning of potential fallout from protracted trade tensions and tight monetary policy.
Some Fed officials, speaking anonymously, have voiced concern that Trump’s pressure campaign could compromise their independence. “There’s a fine line between political influence and economic sabotage,” one policymaker said.
Conclusion: Independence of the Fed in the Spotlight
Trump’s latest remarks may have temporarily cooled speculation about a showdown with Jerome Powell, but they do little to dispel deeper questions about how the central bank will navigate political pressures in the coming months.
With inflation still a concern, the economy showing mixed signals, and the 2024 election looming, all eyes remain on the Fed — and on the delicate balance it must strike between economic data and political noise.
