In a dramatic escalation of tensions between the White House and the Federal Reserve, President Donald Trump has publicly demanded the resignation of Fed Chair Jerome Powell, whom he originally appointed in 2017. Trump's frustration centers on Powell's reluctance to aggressively cut interest rates, especially in contrast to the European Central Bank's recent rate reductions. Trump criticized Powell as "always too late and wrong" and suggested that his "termination cannot come fast enough".
Despite the President's demands, Powell has firmly stated that he will not resign and emphasized the legal protections surrounding the Federal Reserve's independence. Under U.S. law, a sitting Fed Chair can only be removed "for cause," and not merely at the President's discretion. Powell's term is set to continue until May 2026, and he has reiterated his commitment to fulfilling his responsibilities without yielding to political pressure.
The President's dissatisfaction with Powell has led to speculation about potential replacements. Reports indicate that Trump has considered Kevin Warsh, a former Federal Reserve governor and Morgan Stanley banker, as a possible successor. Warsh, known for his conservative economic views and previous advisory roles in Republican administrations, has reportedly met with Trump to discuss the position.Business Insider
This confrontation underscores the delicate balance between the Federal Reserve's independence and the executive branch's influence over economic policy. While the President can express his views and preferences, the Fed operates independently to ensure that monetary policy decisions are based on economic indicators rather than political considerations.
As this power struggle unfolds, it raises important questions about the future of U.S. monetary policy and the potential implications for the global economy. Market participants and policymakers alike will be closely monitoring developments, as any changes in the Federal Reserve's leadership or policy direction could have significant ramifications.
