On Monday, President Donald Trump renewed his criticism of Federal Reserve Chair Jerome Powell, expressing frustration over the Fed’s reluctance to cut interest rates further.
The repeated attacks have unsettled financial markets, raising concerns that Trump might attempt to remove Powell from his post.
Does the President Have the Authority to Fire Powell?
Under the Federal Reserve Act of 1913, members of the Fed’s Board of Governors—appointed by the president and confirmed by the Senate to serve staggered 14-year terms—can only be removed “for cause,” which is generally interpreted to mean misconduct, not disagreement over policy.
However, the law does not explicitly address whether a Fed chair—who is also one of the seven governors—can be removed from their four-year chair term without cause.
Would This Be Unprecedented?
Yes. There is no clear legal precedent, as no president has ever attempted to fire a Fed chair. Nonetheless, ongoing court cases regarding unrelated dismissals by Trump may offer some legal insight. One such case is currently before the U.S. Supreme Court, and any move to fire Powell would likely end up there as well.
What Would Happen if Powell Were Fired?
The consequences would depend heavily on how Trump went about it.
Powell, like previous Fed chairs, holds three roles:
- Chair of the Federal Reserve System
- Member of the Board of Governors
- Chair of the Federal Open Market Committee (FOMC), which sets interest rates
Could Trump Remove Him Only as Fed Chair?
If Trump tried to strip Powell of just the chair title, Powell could still serve as a governor until his term expires in January 2028. The next vacancy on the Board of Governors won’t open until January 2026, limiting Trump’s immediate options. He could nominate another sitting governor to serve as chair, but several—including Trump appointees Christopher Waller and Michelle Bowman—have expressed support for the Fed’s independence. It’s unclear whether any would back the kind of aggressive rate cuts Trump desires.
What About Removing Him as Head of the FOMC?
Trump cannot directly control who leads the FOMC. The FOMC elects its own chair each year, choosing from among its 12 members: the seven Fed governors, the president of the New York Fed, and four regional Fed bank presidents who rotate onto the committee.
Traditionally, the Fed chair is also selected as head of the FOMC, with the New York Fed president as vice chair. However, the committee could in theory select a different member—even Powell himself, if he remains a governor.
REF: REUTERS
