President Donald Trump is ratcheting up his public attacks on Fed Chairman Jerome Powell in a fresh escalation of tension between the executive branch and the Federal Reserve.
The disagreement revolves around Powell’s reluctance to cut rates against a backdrop of economic pressure brought about by the administration’s tariff policies.
Public Rebuke from Trump
President Trump calls for Fed Chair Jerome Powell to be FIRED for being “too late” on lowering interest rates:
“Powell’s termination cannot come fast enough!” pic.twitter.com/rNzYwOA0j2
— Benny Johnson (@bennyjohnson) April 17, 2025
In a posting on Truth Social, the president labeled Jerome Powell “TOO LATE AND WRONG” and added his “termination cannot come fast enough”. It was among the most blatant clashes between a sitting president and the chief of a central bank to have taken place in recent years.
Legal Restrictions to Removal
But by law and custom, the Federal Reserve is an independent agency, and presidents can remove its chair only “for cause,” which usually means some form of wrongdoing rather than a disagreement over policy.
As noted above, this approach has legal foundation in the 1935 Supreme Court case Humphrey’s Executor v. United States, which limited the president’s power to remove the heads of independent agencies. But this administration has signaled that it is ready to break with that tradition. In a case the Supreme Court is set to hear, the rules guiding presidential authority over independent agencies – among them the Federal Reserve – could be rewritten.
Economic Consequences
The dispute comes at a time of economic uncertainty fostered in part by the administration’s tariff policies. Powell recently warned that those tariffs could tip the economy into stagflation – a condition of stagnant growth and high inflation that makes the Fed’s conduct of monetary policy particularly difficult. Markets have reacted negatively to the still-unfolding controversy. Investors fear undermining the Fed’s independence could portend greater volatility and weaker confidence in the US economy.
According to people briefed on the matter, US Treasury Secretary Scott Bessent warned against any attempt to remove Powell, highlighting the prospect of market destabilization.
Political Fallout
The president’s comments also sparked outcry from legislators interested in keeping the Federal Reserve independent. “An independent Fed is essential to a healthy economy, something that Trump has proved is not a priority for him,” Senate Minority Leader Chuck Schumer said.
Outlook
The fight, as it winds through the courts and through the political process, puts a fine point on the sensitive balance among the branches of government and the need to preserve institutional independence.
With the case pending before the Supreme Court, the ruling holds out the prospect of substantial changes to the shape of U.S. economic policy and the separation of powers.
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