In April 2025, tensions escalated between U.S. President Donald Trump and Federal Reserve Chairman Jerome Powell, as Trump publicly called for Powell's 'termination,' expressing his frustration over Powell's refusal to lower interest rates.
⚖️ Legal Controversy over Impeachment
The Federal Reserve Act states that its chairman can only be removed for 'good cause,' such as misconduct or incompetence, and not due to political disagreements. So far, no Federal Reserve chairman has been removed by a U.S. president during their term.
🏛️ Potential Market Impacts
U.S. Treasury Secretary Scott Pruitt warned that Powell's dismissal could destabilize financial markets, potentially raising borrowing costs and negatively impacting the economy. Investors also expressed concern that such a move could undermine the independence of the central bank and affect investor confidence.
🧑⚖️ Jerome Powell's Position
Powell reaffirmed his commitment to complete his term, which ends in 2026, emphasizing the importance of the Federal Reserve's independence in making decisions free from political pressures.
🏛️ The Supreme Court and Its Potential Role
The U.S. Supreme Court is currently considering a case that may impact the president's powers to remove heads of independent agencies, which could have implications for Powell's fate.