#PowellVsTrump
The clash between Donald Trump and Jerome Powell centers on Trump's dissatisfaction with the Federal Reserve's monetary policy decisions, particularly interest rates. Trump has publicly expressed frustration with Powell's leadership, suggesting he'd prefer lower rates to boost economic growth. Here are the key developments in this ongoing saga ¹ ² ³:
- *Trump's Threats*: Trump reportedly drafted a letter to fire Powell, citing dissatisfaction with the Fed's renovation expenditures and rate policies. However, he later downplayed the idea, stating he'd only fire Powell "if there's corruption".
- *Market Reaction*: The possibility of Powell's dismissal sparked volatility in financial markets, with stocks falling and bond yields rising. Markets are concerned about the potential erosion of the Fed's credibility and independence.
- *Legal Implications*: Legal scholars argue that removing Powell would be challenging, as the Federal Reserve Act allows removal "for cause," typically implying serious misconduct. Any attempt would likely face immediate legal challenges.
- *Potential Successors*: Judy Shelton, a long-time Trump loyalist and Fed-skeptic, is seen as a potential successor to Powell, with odds of around 3.50 in betting markets. Other potential candidates include Kevin Warsh, Arthur Laffer, and Gary Cohn.
- *Fed Independence*: The debate highlights the importance of central bank independence in maintaining economic stability. Powell has emphasized that the Fed will make decisions based on economic data, without political influence.
The odds of Trump firing Powell in 2025 are currently around 25%, according to betting markets ⁴.
