Donald Trump Intensifies Pressure Campaign Against Federal Reserve Chair Jerome Powell

U.S. President Donald Trump has escalated his criticism and political offensive against Federal Reserve Chair Jerome Powell, sparking renewed concerns over the independence of the U.S. central bank. In recent days, Trump’s remarks have raised speculation about Powell’s job security, rattling financial markets and prompting widespread political reaction.

Trump's Renewed Threats: A Political Pressure Campaign

Despite publicly stating he’s not planning to fire Federal Reserve Chair Jerome Powell, former President Trump left the door open — and rattled markets — with a caveat:

“I don’t rule out anything, but I think it’s highly unlikely, unless he has to leave for fraud,” U.S. President Donald Trump said Wednesday.

This remark followed a private meeting Tuesday night, where Trump reportedly floated the idea of firing Powell to a group of receptive Republican lawmakers. An aide later hinted that action might be imminent. Though Trump publicly backtracked the next day, the underlying message remained ambiguous and threatening.

Fed Building Renovation at Center of Allegations

The latest front in Trump’s campaign involves scrutiny of the Federal Reserve’s multi-billion-dollar renovation of its two main buildings in Washington, D.C. Trump and his allies claim the $2.5 billion project is extravagant and possibly indicative of financial misconduct.

“There are many people who say he should be removed because of the fraud of what he’s doing,” Trump said during an interview on Real America’s Voice.

Fed Chair Powell has strongly denied these allegations, calling such reports inaccurate and requesting the inspector-general to review the renovation project.

Market Reaction to Firing Speculation

Markets, typically sensitive to Fed independence, were shaken by Trump’s comments. The possibility that Powell could be ousted caused:

• The U.S. dollar to drop more than 1%

• A spike in long-term Treasury yields

Though those losses were reversed after Trump signaled no immediate action, the uncertainty lingers, especially as Powell’s term as chair ends in May 2025.

“If he wants to resign, that would be up to him. They say it would disrupt the market if I did,” Trump added.

Legal Ambiguity Over Firing a Fed Chair

It's legally unclear whether a sitting U.S. president can directly remove the chair of the Federal Reserve. The Federal Reserve Act doesn't explicitly grant such authority. Yet Trump’s pattern of floating ideas publicly — often in private discussions first — followed by denials or changes, leaves the situation volatile.

Some reports even suggest that Trump showed lawmakers a draft dismissal letter for Powell during Tuesday’s meeting, though he later denied it.

Ad Hoc Investigations Into Fed Spending

To further apply pressure, a trio of Trump aides are reportedly planning a visit to the Fed’s renovation sites:

• Russell Vought, Director of the Office of Management and Budget

• James Blair, Deputy Chief of Staff

• Bill Pulte, FHFA Director and outspoken Powell critic

“His time has come and the president has made clear that he doesn’t want him here,” Pulte said on Bloomberg Television.

Powell’s Limited Ability to Respond

As head of the independent central bank, Powell has limited capacity to engage in political spats, especially while trying to maintain monetary policy credibility. However, global markets, economists, and even political figures have come to his defense.

Expert View:

“We think Trump is testing the markets to see whether he can fire Powell,” said Anna Wong, Chief U.S. Economist at Bloomberg Economics.
“The sharp reaction appears to have convinced him to pull back… for now.”

Wong warns, however, that this may just be the beginning of a broader escalation — and that removing Powell could hurt economic growth and worsen inflation and unemployment.

Bipartisan Political Reactions

Senator Elizabeth Warren, a known Powell critic, still condemned Trump’s approach:

“Give me a break. Nobody is fooled by this pretext to fire Chair Powell. And markets will tank if he does.”

Meanwhile, reactions among Republicans were mixed:

• Senate Majority Leader John Thune: “My understanding is he doesn’t have any intention of doing that.”

• House Speaker Mike Johnson: “New leadership would be helpful at the Fed,” while expressing doubts over Trump's authority to dismiss Powell.

Possible Successors to Powell

Trump’s circle has begun quietly evaluating replacements for Powell, whose chair term ends in May 2025. His board term lasts until 2026, but it’s unclear if he would stay without the chairmanship.

Contenders include:

• Scott Bessent, Treasury Secretary and close Trump advisor

• Kevin Hassett, Director of the National Economic Council

• Kevin Warsh, former Fed governor

“Fortunately, we get to make a change in the next, what, eight months or so,” Trump said.
“I’m only interested in low-interest people.”

This statement further underscores Trump’s push to reshape the Federal Reserve to align with his economic agenda.

Conclusion: Fed Autonomy Under Threat?

Trump’s latest salvo against Powell underscores a broader theme of political interference in monetary policymaking. While the immediate risk of Powell’s removal may have receded, the credibility of the Federal Reserve is once again in question.

With key appointments pending and markets on edge, the outcome of this standoff could shape U.S. monetary policy for years to come — and it highlights the increasingly blurred lines between politics and central bank independence.