On Saturday, President Donald Trump shared a cartoon on Truth Social showing him firing Federal Reserve Chair Jerome Powell. In the image, Trump is seen pointing at Powell and shouting, “YOU’RE FIRED!” while Powell stands with a box of his things.
Rate Policy Criticism Continues
President Trump has frequently criticized Powell for being too slow in lowering interest rates, even giving him the nickname “Too Late Powell.” The latest criticism came after the Fed cut rates earlier this month for the first time this year.
Powell’s term as Fed Chair is set to end in May 2026.
Legal Precedent Questions Fed Removal
President Trump firing Powell would be unprecendented given that no president in the country’s history has done so before. A recent Supreme Court ruling made it clear that the president doesn't have the power to remove Fed officials on a whim.
Powell has consistently stated that his removal is “not permitted under the law.”
Market Response and Fed Independence
Financial markets have shown little response to Trump's ongoing threats against Powell. Many economists and investors believe that firing Powell before his term ends could push long-term interest rates higher. This is because it could indicate that the Fed might start making decisions aligned with Trump's preferences, rather than adhering to its independent mandate from Congress.
Ed Yardeni of Yardeni Research earlier argued that Trump's criticism of Powell is part of an effort to weaken the dollar. Meanwhile, former Trump advisor Larry Kudlow suggested that Trump might “take over the Fed” once Powell's term ends.
In contrast, Senator Elizabeth Warren defended Powell, pointing to Trump's “chaotic tariff policies” as the main cause behind rising prices.
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