On Friday evening, the U.S. financial community was shaken when Billy Pulte – the current director of the Federal Housing Finance Agency (FHFA) – unexpectedly announced that Jerome Powell would resign as Chairman of the Federal Reserve. This decision came after months of enduring relentless political pressure from President Donald Trump and his close advisors.

Information quickly spread across financial channels, but the bond market seemed skeptical. Bond yields continued to rise, peaking during the day – a sign that investors did not believe Powell would actually leave his position of power.

The Quiet Confrontation Between Trump and Powell

The conflict between President Trump and Chairman Powell is not new. For over a year, Trump has continuously attacked the Fed's monetary policy, claiming that Powell is 'hampering' the U.S. economy. The climax occurred on June 9, when the president unexpectedly demanded the Fed cut interest rates by up to 300 basis points (equivalent to 3%), a request that experts deemed 'economically irrational.'

The president claimed that a 3% interest rate cut would save the U.S. '360 billion dollars per point per year' – totaling over 1.08 trillion dollars annually. However, this figure is calculated based on a total federal debt of 36 trillion dollars, which includes intra-governmental debt. In reality, only about 29 trillion dollars constitutes public debt that actually affects interest costs. Experts quickly pointed out errors in Trump's calculations.

Moreover, even if Powell agreed to cut interest rates so deeply, it is impossible to refinance the entire national debt immediately. According to analyses, only about 20% of the debt could be refinanced in the first year, equivalent to $174 billion in savings. If this process extends over 5 years, the total maximum savings would still be about $2.5 trillion – far less than what Trump claimed.

Political Pressure and Public Smear

It is not possible to directly dismiss Powell due to legal constraints – The U.S. Supreme Court has previously ruled that the Fed Chairman cannot be fired without 'just cause' – President Trump and his team shifted to tactics that exert personal pressure and media attacks.

A series of aggressive statements came from the White House. On Friday morning, standing on the south lawn before heading to Texas, Trump continued to criticize Powell: 'I think he's doing a terrible job. We should lower interest rates by at least 3 points. He is costing America billions of dollars.'

New York Times reporter Maggie Haberman, speaking on CNN, stated that Trump is unlikely to fire Powell, but is clearly 'making his life as miserable as possible.' She also highlighted the irony that Powell was appointed by Trump himself and is a Republican.

The Fed Building Worth $2.5 Billion Becomes a 'Scapegoat'

In addition to the interest rate issue, the White House also targeted the renovation project of the Fed's headquarters – the Marriner S. Eccles Building in Washington D.C., with a total investment of up to 2.5 billion dollars. This project was approved by the National Capital Planning Commission (NCPC) in 2021.

Trump's budget director – Russell Vought – sent a letter on Thursday questioning Powell about the legality of the items in the project. The next day, he sharply criticized the construction, calling it 'a cost nightmare' and comparing it to the Palace of Versailles, likening it to 'perhaps the eighth wonder of the ancient world.'

Powell subsequently dismissed these accusations during a Senate hearing. He asserted that the rumors were misleading: 'There is no VIP dining room, no new marble, no waterfall, no rooftop garden.' According to him, the marble installation was merely a replacement of damaged panels.

The Painful Withdrawal

Despite all efforts to protect his image and explain to the public, Powell could not prevent the onslaught of attacks. When the possibility of legal dismissal was no longer viable, President Trump and his associates used political pressure and smear tactics to 'push' him out of office.

Although there has not been official confirmation from the Fed at the time of publication, the involvement of Billy Pulte – a key figure in housing finance policy – as the informant indicates the seriousness of the announcement. Some internal sources revealed that the Trump administration is quietly compiling a list of replacement candidates, although no clear decision has been made.

Conclusion: The Politicization of the Fed Has Begun

Jerome Powell's withdrawal, if confirmed, marks a significant turning point in the relationship between the Federal Reserve and the White House. This is not just a conflict over economic policy, but a clear manifestation of political interference in an institution designed to be independent.

With Trump having appointed Powell and now leading the campaign against him, this situation could set a dangerous precedent, undermining market confidence in the independence of U.S. monetary policy.