Jerome Powell has undergone extraordinary, unprecedented scrutiny since taking the helm of the U.S. Federal Reserve in 2017. Donald Trump, the then-president, appointed him, which only intensified the spotlight on his leadership. Trump is a fan of crack pot monetary policies, urging Powell not to keep interest rates so high. It’s unclear from this position how he really intends to fire Powell from his job. That shift has gained a head of steam largely since President Joe Biden nominated Powell to a second four-year term in 2021. Her term is set to expire in May 2026. Powell is now set to remain on the board of governors until January 2028. This extension complicates the story of his tenure even further.
The Federal Reserve, the independent central banking system of our country, was created by an independent board of governors in 1913, through the Federal Reserve Act. The president appoints the chair and two vice chairs from this pool of seven governors. The overall independence of the Federal Reserve raises serious concerns about the ability of executive authority to penetrate its leadership. Trump’s criticisms have intensified, especially concerning inflation and economic management, leading to discussions about Powell’s future.
Trump’s Criticism of Powell
Donald Trump’s annoyance with Jerome Powell has been no secret since his time in the White House. Trump has consistently blamed Powell for not cutting interest rates, which in Trump’s mind, would jumpstart economic growth. In a statement that captured the mood that day, Trump called it
“No, I talked about the concept of firing him. I said, ‘What do you think?’ Almost every one of them said I should.”
Concerns over inflation have stoked his ire even further. Powell has made it clear that reaching their inflation targets will likely involve both a cooler economy and a more subdued job market.
In some ways, it is hard to blame Trump for his frustrations. He thinks it’s “highly unlikely” he’d fire Powell without evidence of fraud spelled out. He drove home that message last week when testifying about the Federal Reserve’s huge renovation bill, totaling $2.5 to $2.7 billion.
“And it’s possible there’s fraud involved with the $2.5, $2.7 billion renovation. This is a renovation, how do you spend $2.7 billion? And he didn’t have proper clearance,” Trump added.
Legal Perspectives on Dismissal
Whether Trump would even have that authority to legally fire Powell in the first place is hotly argued among legal experts. Others claim that the Federal Reserve’s independence prevents the president from wielding power here. Peter Conti-Brown, a professor of financial regulation, commented on the lack of
“no factual basis to support any conclusion that the cost overruns on the renovation project constitute anything like fraud or gross negligence.”
Conti-Brown was clear that if Powell had done any actual fraud in this case, that would warrant his removal. He added that there’s absolutely no proof of this type of fraud.
Former U.S. Treasury Department attorney Lev Menand agreed, adding that these are extraordinary times due to Trump’s presidency and proposed actions against Powell. He stated,
“In normal times, I would say Powell wins 10 times out of 10.”
In closing, though, Menand cautioned that these are not “normal times.” He explained that recent legal precedents suggest courts may overlook unlawful conduct by a president if they interpret their constitutional powers too broadly.
The Future of Jerome Powell
Jerome Powell’s current term as Federal Reserve Chair runs through May 2026. Contrary to what some may think, he’s already proven committed to bring real and meaningful inflation challenges to the table. Back in November of 2017, he was asked grilling about whether he would resign or if Trump could fire him. Powell asserted that it is
“not permitted under the law” for such an action to take place.
Debates over the scope of Trump’s authority continue to develop. It’s important to understand what these appointments—and potential removals—mean for independent leaders in agencies like the Federal Reserve. The challenge, of course, is that presidential authority and institutional independence need to exist in a constant state of tension. This balance is indispensable to both sound economic policy and good governance.
Given that, it makes sense that in July, Trump was allegedly showing to lawmakers a draft letter to fire Powell. He told reporters that he was “not planning on doing anything” to address it. This logical inconsistency only deepens the mystery about what Powell should expect, and what exactly Trump has in mind.
