US President Donald Trump has intensified his criticisms of Federal Reserve Chair Jerome Powell, calling for his immediate resignation. This demand was made in a post on Trump’s Truth Social platform, where he stated, “‘Too Late’ should resign immediately!!!” The post also linked to an article suggesting an investigation into Powell’s testimony regarding renovations at the Federal Reserve’s Washington headquarters.
Trump, who originally nominated Powell during his first presidential term, has frequently criticized him for not lowering interest rates. However, it remains uncertain whether Trump possesses the authority to remove Powell from his position. Despite Trump’s persistent disapproval, he had previously stated he had “no intention of firing him.” The President’s call for a rate cut aligns with his goal to stimulate economic growth.
Background and Context
The Federal Reserve, under Powell’s leadership, has faced repeated scrutiny from Trump, especially regarding interest rate policies. Trump believes lower rates could bolster the economy, a stance he has maintained since Powell’s appointment. Powell, however, has pointed to external factors, notably the impact of Trump’s tariff policies, as reasons for maintaining current rates.
In a recent meeting with central bankers in Portugal, Powell acknowledged that the Fed might have cut rates if not for the administration’s tariff announcements. “I think that’s right,” he said when questioned about the potential for rate cuts absent the tariff hikes.
Legal and Political Implications
The US Federal Reserve, as an independent federal agency, operates with a degree of autonomy. According to a landmark US Supreme Court ruling in 1935, board members of such agencies can only be removed “for cause” before their terms expire. Powell has reiterated that he would not step down if asked by the President, emphasizing that such an action is “not permitted under law.”
This legal framework presents a significant hurdle for Trump’s demands. While he has challenged political norms in the past, including dismissing independent regulators, these actions have often faced legal challenges.
Calls for Investigation
Adding to the controversy, Bill Pulte, the director of the Federal Housing Finance Agency, has called for an investigation into Powell. Pulte, who has been a vocal critic of Powell, urged Congress to examine Powell’s “political bias and his deceptive Senate testimony.” He argued that these issues could justify removal “for cause.”
Powell recently defended himself before the Senate, stating that reports on the costs and features of the Fed’s headquarters were “misleading and inaccurate in many, many respects.” The Federal Reserve has declined to comment on Trump’s recent remarks.
Looking Ahead
The ongoing tension between Trump and Powell highlights the broader debate over the independence of the Federal Reserve and its role in shaping economic policy. As Trump prepares for a potential return to the White House, the future of US monetary policy remains uncertain.
Experts suggest that the President’s continued pressure on the Fed could have lasting implications for the institution’s independence. Whether Congress will heed calls for an investigation into Powell remains to be seen, but the situation underscores the complex interplay between politics and economic governance in the United States.
As the debate unfolds, stakeholders will be closely watching for any shifts in policy or leadership at the Federal Reserve, which could have significant repercussions for both domestic and global markets.
