Donald Trump, President of the United States, is evaluating the possibility of removing Jerome Powell, the current head of the Federal Reserve. This intention was confirmed by Kevin Hassett, the White House's chief economic advisor, who stated that the president's team is considering options regarding this possible change in the leadership of the Central Bank. This statement came after Trump issued strong criticisms towards Powell's management, thus reviving a tension that has been building for years between the two.
Although Trump does not have the direct authority to remove the chairman of the Federal Reserve, the law allows for the initiation of a procedure under certain conditions if justified cause is demonstrated. Hassett stated that the analysis of the case is still ongoing, keeping open the possibility of an institutional confrontation that could trigger a new controversy between the White House and the Federal Reserve. This situation places the limit of presidential power over autonomous institutions at the center of the debate.
Trump has repeatedly expressed his discontent with Powell's decisions, whom he himself nominated in 2017 during his first term. In particular, the president has questioned Powell's reluctance to lower interest rates, a measure that Trump considers crucial for stimulating the economy. On several occasions, he has described the Federal Reserve chairman as an obstacle to economic growth and has even referred to him as an enemy of financial progress.
During a recent public address, Powell warned that the tariff policies driven by Trump could raise prices and slow economic growth. This stance was not well received by the president, who, the next day, intensified his attack, declaring that he was determined to achieve Powell's removal. His words reflected a firm intention: He will leave very quickly, believe me, he stated in front of the media.
The possibility of removing Powell is not straightforward. The Federal Reserve was conceived as an independent entity, precisely so that monetary policy decisions would not be influenced by political cycles. This institutional design responds to the need to maintain economic stability beyond the short-term interests of governments. This was also established by American jurisprudence, especially through the historic ruling of 1935 in the case of Humphrey’s Executor versus United States.
It is worth noting that Powell was re-elected by Democratic President Joe Biden in 2022, which extends his term beyond Trump's presidency. This complicates the situation further, as any attempt at removal could be interpreted as a direct interference in the Central Bank's autonomy. Additionally, such a move could provoke a loss of confidence in the markets, affecting the credibility of the American financial system.
The Federal Reserve needs independence to act freely in complex economic scenarios. If political interests were allowed to dictate its decisions, its role as a guarantor of economic stability would be seriously compromised. History has shown that independent central banks are more effective in controlling inflation and responding to economic crises without the burden of external pressures.
Finally, although the Trump administration has promoted arguments aimed at increasing presidential authority over independent agencies, judicial precedents and the potential economic consequences of weakening the Federal Reserve work against that strategy. In a context where the Supreme Court maintains a conservative majority, there is still strong institutional defense of the Central Bank's autonomy. Therefore, while Trump may pressure and maneuver politically, the possibility of removal without legal grounds remains, for now, unlikely.