President Trump escalated his conflict with Federal Reserve Chair Jerome Powell this week, telling Fox Business host Maria Bartiromo that he would move to fire Powell if the outgoing central bank chief follows through on his pledge to remain as a Fed governor after his chairmanship expires on May 15. “Then I’ll have to fire him, OK, if he’s not leaving on time, I’ve held back firing him,” Trump said. “He’s doing a bad job. He should be lowering interest rates.”
The statement sharpens a standoff that has been building for months. Powell’s term as Fed chair ends May 15, but as a member of the Fed’s Board of Governors his tenure runs through January 2028. Past Fed chairs have typically departed the board after stepping down as chair, but Powell has indicated he plans to remain as a governor as long as the Justice Department continues its probe into cost overruns at the Fed’s headquarters renovation project. He has characterised the investigation as a politically motivated pressure campaign.
“I’ve wanted to fire him. But I hate to be controversial,” Trump added in the Fox Business interview, a comment that paradoxically served to underscore the extent to which the prospect of firing the Fed chair has been on the president’s mind throughout his second term.
The legal picture is complicated. The Federal Reserve Act specifies that governors can only be removed for cause, a high legal standard. Dan Urman, a law professor at Northeastern University, told CBS News: “As the law currently stands, it is not legal for President Trump to fire Powell at any point — as chair or as governor — unless the firing is ‘for cause.'” The Supreme Court is currently weighing related cases about presidential authority to remove leaders of independent federal agencies, with a decision expected by late June, after Powell’s chairmanship has already ended.
Kevin Warsh, Trump’s nominated successor as Fed chair, has disclosed a personal fortune of approximately $131 million and is waiting for Senate confirmation. Republican Senator Thom Tillis of North Carolina has said he will not vote to confirm Warsh until the DOJ probe is resolved, creating a scenario in which Powell could remain in a grey-zone position for an extended period. Treasury Secretary Scott Bessent expressed optimism that Warsh would be confirmed on schedule, calling the firing question a “moot” concern if confirmation proceeds as hoped.
Markets are watching the standoff closely. Columbia Business School professor Brett House stated the stakes directly: “There’s little question that markets will sell off if President Trump attempts to fire Jerome Powell.” Fed independence is viewed as foundational to the credibility of US monetary policy, and any action that appears to subordinate the central bank’s rate decisions to presidential pressure would likely trigger an immediate and significant negative market reaction regardless of the underlying legal resolution.
