The debate around Federal Reserve Chair Jerome Powell’s job security has intensified in recent days, following increasing criticism from both political and economic circles. Speculation is mounting that the White House may be moving closer to firing Powell ahead of the 2026 end of his term.
Trump Administration’s Tensions With the Federal Reserve
Former President Donald Trump, now back in the White House, has made no secret of his frustration with Powellâs monetary policy stance. Although Powell cut interest rates by 75 basis points before the 2024 election, the chairman has since resisted further rate cuts. His concern: that loosening monetary policy too quickly could fuel inflation, especially in light of new tariff measures recently enacted by the administration.
âJerome Powell has been very bad for our country,â Trump stated during a recent interview. âWe should have the lowest interest rate on Earth, and we donât. He just refuses to do it.â
https://www.coindesk.com/opinion/2025/07/16/the-node-the-plot-to-fire-powell
Legal Limitations on Removing a Fed Chair
Under U.S. law, the Federal Reserve operates independently from the executive branch. A sitting chair like Powell can only be removed âfor causeâ, typically meaning proven misconduct or failure to perform official duties. Political disagreement does not meet the legal threshold for dismissal.
Despite this, the administration has been exploring potential avenues to challenge Powellâs leadership. Some insiders suggest that scrutiny over the $2.5 billion Fed headquarters renovation may provide a legal pretext. Critics argue Powell misled Congress in prior testimonyâthough records indicate the project began before he assumed his role in 2018.
Congressional and Political Pressure Building
Several prominent lawmakersâincluding Senators Rick Scott, Tommy Tuberville, and House Judiciary Chair Jim Jordanâhave publicly criticized Powellâs recent decisions. Meanwhile, Treasury Secretary Scott Bessent revealed that a âformal processâ to replace Powell is underway, and Congresswoman Anna Paulina Luna stated on social media that his removal is “imminent.”
These developments briefly pushed prediction market odds of Powell being fired to 27%, though the probability dropped after Trump publicly denied any immediate plans to dismiss him.
Whatâs Next for Interest Rates and Markets?
Markets are closely watching the situation. According to the CME FedWatch Tool, there is only a 2.6% chance of an interest rate cut at the next Federal Open Market Committee (FOMC) meeting on July 30. However, expectations for a rate cut rise to nearly 60% for the September meeting.
The Federal Reserveâs independence and stability are crucial to market confidence. Any disruption to its leadership could trigger volatility across global financial markets.
Final Thoughts
While no final decision has been made, the pressure on Jerome Powell is unmistakable. The coming weeks may prove critical in determining not only the fate of the Fed chair but also the direction of U.S. monetary policy heading into late 2025.
Disclaimer
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