Trump Announces Low Likelihood of Firing Fed Chair as Discussions Resurface

Following previous critical remarks directed at Powell, President Trump has now revealed it is "highly unlikely" that he will terminate the Fed chair, stirring mixed reactions from the financial sector after mentioning potential firings to Republican lawmakers.

President Donald Trump has declared that he does not plan to fire Jerome Powell, the chair of the US Federal Reserve, marking a significant turn in discussions surrounding his leadership. This announcement comes shortly after Trump raised eyebrows by consulting lawmakers on the possibility of sacking Powell, which initially led to declines in both stock markets and the dollar.

Despite escalating his critique of Powell—a position he appointed in 2017—Trump stated in response to inquiries, "It's highly unlikely" he would pursue such action unless for severe breaches like fraud. His comments were made in the context of continued frustration over Powell’s management of the Fed, as Trump has frequently urged for lowered interest rates and criticized Powell's performance, labeling him a "knucklehead."

The outlook for Powell, whose term expires in May 2024, remains uncertain. While he possesses the authority to continue as a governor of the Federal Reserve until 2028, Trump’s administration has initiated a search for a potential successor. Speculations have surfaced regarding Treasury Secretary Scott Bessent, along with Kevin Hassett and Kevin Warsh, as contenders for the role.

Constitutionally, the Federal Reserve operates with a degree of independence from the White House. Powell has contended that removal based solely on economic disagreements is unsupported by law. Nonetheless, the discussions around a replacement signal an evolving landscape within the US economic governance as political dynamics shift.