A Historic Moment in the U.S.: Trump vs. Powell, Can the President Fire the Fed Chair?

Discussions about terminating Federal Reserve Chair Jerome Powell’s tenure and the independence of the Federal Reserve have been heating up both before and after Donald Trump took office. Following the European Central Bank’s interest rate cut in April 2025, Trump renewed his calls for rate cuts, criticizing Powell’s inaction and threatening to remove him from his position prematurely. This is not just a clash of opinions but also involves significant political and legal issues in the United States.

On Thursday, April 17th, President Trump launched a barrage of attacks against Fed Chair Powell—three times in one day. Trump described some of Powell’s recent comments as “complete chaos.” He argued that the Fed should have long ago followed the ECB’s lead in cutting rates, adding, “Powell’s termination cannot come fast enough.”

Trump went on to say that Powell has failed to fulfil his duties as Fed Chair. If he were to demand Powell’s resignation, Powell would have to comply because “he is always too slow to act.”

Trump reiterated his earlier accusation that Powell is now “playing politics.”

This latest outburst by Trump was both familiar and different from his past criticisms. The tension between Trump and Powell first came to light during the 2018 rate hike cycle, when Trump accused the Fed’s tightening policy of posing a threat to the U.S. economy.

Months ago, Trump expressed his desire to expand his "influence" over the Fed, reigniting concerns about the central bank’s independence. However, Trump later pledged to allow Powell to complete his term (which ends in 2026 for his chairmanship and 2028 for his board membership), stating he had no plans to fire him.

As expectations of slowing U.S. economic growth have intensified, Trump has recently ramped up pressure on the Fed Chair again. Yet Powell has maintained a cautious monetary policy stance, arguing that the impact of Trump’s tariff policies on inflation could be temporary—or it could persist.

A More Chaotic U.S. Landscape

Democratic Senator Elizabeth Warren stated that while the president has freedom of speech like everyone else, he does not have the authority to fire Powell. If he were to attempt this, she warned, the markets would crash.

Warren noted that even authoritarian regimes try to establish central banks independent of the president to attract capital.

Citibank issued a warning: Beyond imposing high tariffs and other previously unconventional policies, if the independence of the central bank crosses the Rubicon, there will be more severe and permanent risks to economic and market confidence. The Rubicon metaphor refers to a point of no return.

Is It Legally Permissible?

Whether the U.S. president can directly fire the Federal Reserve Chair remains an issue that has not been clearly defined by law. According to Section 10 of the Federal Reserve Act, members of the Federal Reserve Board (including the Chair) can be removed by the president for cause—but such cause typically refers to serious misconduct or abuse of power.

In the 1935 case Humphrey’s Executor, the Supreme Court ruled that the president cannot remove members of independent agencies due to policy disagreements. Reports suggest that the Department of Justice is attempting to overturn this precedent.

Bloomberg commented that if the Supreme Court were to overturn this precedent, the Fed’s independence rating would decline, making it the only central bank in the G7 group to lose statutory independence for reasons unrelated to banking supervision.