Whether President Donald Trump can fire Federal Reserve Chairman Jerome Powell is a complex issue involving legal, political, and structural independence of the Fed. To understand this issue, we will delve into several aspects as follows:
Under U.S. law, the President does not have the authority to arbitrarily fire the Chairman of the Fed. Specifically:
The Federal Reserve Act stipulates that members of the Board of Governors of the Fed, including the Chairman, are appointed for fixed terms (4 years for the Chairman, 14 years for Board members). They can only be removed "for cause," meaning there must be serious misconduct, such as corruption, violation of law, or failure to perform duties adequately.
Firing without specific cause (e.g., policy disagreement) would violate the independence of the Fed, which is designed to avoid short-term political influence from the administration.
In Powell's case: Jerome Powell was appointed as Chairman of the Fed by Trump in 2018, and his term as Chairman lasts until May 2026 (his term as a Board member lasts until 2028). Thus, unless there is clear evidence of misconduct, Trump has no legal basis to fire Powell before the end of his term.
2. So what can Trump do to exert pressure or remove Powell?
Although he cannot directly fire him, Trump can use other measures to influence or seek to replace Powell:
Public pressure: Trump has repeatedly criticized Powell on social media and in statements, calling him a "mistake" or threatening to fire him. These statements aim to create political pressure, undermining Powell's credibility.
Appointing new individuals: Trump can nominate a new Chairman when Powell's term ends in 2026 or appoint other members to the Board of Governors to indirectly influence Fed policy. Currently, Trump has nominated close associates, such as Scott Bessent, as Secretary of the Treasury, who can coordinate to exert pressure on the Fed.
Changing the law: Trump can urge Congress to amend the law to increase presidential control over the Fed. However, this would require bipartisan support and could face significant resistance from lawmakers protecting the Fed's independence.
3. The consequences if Trump tries to fire Powell
If Trump attempts to fire Powell without legal cause:
Legal response: Powell or related parties could sue in court, and federal courts are likely to protect the independence of the Fed, as has occurred in precedents involving independent agencies.
Market volatility: Such a move would cause serious instability in the financial markets, diminishing investor confidence in the stability of U.S. monetary policy.
Political response: Congress, particularly lawmakers from both parties, may strongly oppose this, as the independence of the Fed is seen as foundational to the U.S. financial system.
In the past, no U.S. president has successfully fired the Chairman of the Fed; presidents like Richard Nixon have pressured the Fed, but did not cross legal boundaries. Recently, Trump threatened to fire Powell during his first term (2017-2021), but was unable to do so due to legal and political barriers.
In summary:
Trump cannot easily fire Jerome Powell due to legal regulations protecting the independence of the Fed. He can exert pressure through public criticism, appoint close associates, or push for changes in the law, but directly firing Powell without legal cause would face significant legal, political, and economic hurdles. Powell is likely to maintain his position until the end of his term as Chairman in 2026, unless there are unexpected developments or serious misconduct on his part.