Trump Denies Claims About Removing Powell from Fed Post
President-elect Donald Trump has dismissed speculation about removing Jerome Powell as Federal Reserve Chair, despite his campaign claims of taking direct control of the central bank and the economy.
In an interview on NBC's Meet the Press, Trump stated:
“Fire him? No, I don't see it.”
The president added:
“I think if I told him to, he would. But if I asked him to, he probably wouldn't.”
Trump Says He Won’t Fire Fed Chair Jerome Powell Despite Past Criticismhttps://t.co/YyzkMQ65Pg pic.twitter.com/005A3rRmhq
— Forbes (@Forbes) December 8, 2024
Powell, appointed by Trump himself, has firmly asserted his position.
Following Trump's election victory, Powell reaffirmed the Federal Reserve's independence, emphasizing that he would not step down if asked and clarifying that the president lacks the authority to dismiss him or other senior Fed officials.
🚨Update: “I’m in control!” FED Chairman Jerome Powell says he would NOT step down if Trump asked for his resignation: ‘Not permitted!’ Will hold on to power under the control of the CIA and Western elites!! Threatens Trump in secret that he will crash the economy if removed!! pic.twitter.com/aXwKUyz3Fe
— US Civil Defense News (@CaptCoronado) November 8, 2024
Trump vs Powell
Trump's stance on the Federal Reserve has always sparked debate, rooted in his belief that presidents should wield greater influence over monetary policy.
His frustration with Powell is well-documented, particularly over interest rate hikes during Trump's first term, which he blamed for hampering economic growth.
At one point in 2018, Trump even considered firing Powell but refrained, likely aware of the legal barriers.
The Federal Reserve Act permits the removal of board members only "for cause," such as misconduct or abuse of power—not policy disagreements.
Trump noted in an October interview with Bloomberg:
"I think I have the right to say, 'I think you should go up or down a little bit.' I don't think I should be allowed to order it, but I think I should be able to comment.”
Trump has not shied away from ridiculing Powell, once calling his role "the greatest job in government.”
His words were:
“You show up to the office once a month, and you say, 'Let's see, flip a coin.'"
Wow. Trump on the rampage in this interview with Bloomberg. Absolute treat.
Takes on the Federal Reserve to China to Wall Street Journal. pic.twitter.com/VxN5eL8Hwu
— Vishal Bhargava (@VishalBhargava5) October 16, 2024
In a telling moment, Trump reportedly quipped during a late-night Oval Office call, "Looks like I'm stuck with you.”
Despite their turbulent history, Powell has expressed confidence that new tensions with the Trump administration are unlikely.
While Powell's term as Chair extends through 2026, his 14-year tenure as a Federal Reserve Governor does not end until 2028, leaving Trump with limited options to replace him entirely.
Trump's Limited Influence over Fed
The US president holds significant influence over the Federal Reserve through appointments to the Board of Governors, including key leadership roles like Chair and Vice-Chair.
Governors serve 14-year terms, while chairs serve four-year terms, and all members participate in the Federal Open Market Committee (FOMC), which sets interest rates.
During his next term, Trump will have at least two opportunities to shape the Fed's leadership, including a vacancy in January 2026 when Governor Adriana Kugler's term ends.
These appointments require Senate confirmation, but with a Republican majority, Trump is likely to face fewer obstacles than during his first term, when several of his nominees were blocked.
However, presidential influence over the Fed has limits.
The decentralised system includes 12 regional bank presidents chosen independently by their respective bank boards, with oversight from the Federal Reserve Board.
This structure ensures a degree of insulation from direct presidential control.
Trump's approach to influencing the Fed has been unusually public, marked by frequent criticism of Powell.
Accusing Powell of poor decision-making, Trump has often lamented the Fed's track record, claiming they've "gotten it wrong a lot" and critiquing Powell's timing as being "too early or too late.”
TRUMP CRITICIZES POWELL, VOWS NOT TO REAPPOINT IF REELECTED
Donald Trump expressed his disapproval of Federal Reserve Chair Jerome Powell, stating that if he were reelected, he would not reappoint him.
Read more: https://t.co/Ov6hpcSCNz via @BBNTimes_en pic.twitter.com/ppJeuvPodq
— BBN Times (@BBNTimes_en) February 2, 2024
While presidential attempts to sway the Fed are not new, Trump's outspoken grievances have amplified the ongoing debate about the central bank's independence.
The Need for Fed Maintain Independence
The Federal Reserve's mandate to manage inflation and employment hinges on its independence from political influence, a principle Chair Jerome Powell views as vital to maintaining public and investor trust.
“The Fed must remain apolitical," Powell affirmed earlier this year.
Yet, the reality is more nuanced.
The Fed often operates within a political framework, collaborating with the Treasury Department and assessing the economic ripple effects of government policies like tax reforms or spending initiatives.
Critics argue that such interactions blur the lines of apolitical governance.
Peter Conti-Brown, a Federal Reserve historian at the Wharton School, characterises the institution as "deeply political," though he distinguishes this from partisanship, noting that the Fed’s decisions are informed by diverse perspectives.
Despite these complexities, the Federal Reserve has upheld its independence for over a century, serving as a global model for central banks.
This autonomy enables it to make difficult but necessary decisions—such as raising interest rates to combat inflation—free from the specter of political retaliation.