US President Donald Trump fired a fresh salvo against Federal Reserve chairman Jerome Powell, escalating attacks for resisting further interest rate cuts. The clash is rattling financial markets, raising a critical question: Can Trump actually fire Powell?
The answer is murky—and the implications could be huge.
Under the Federal Reserve Act of 1913, members of the Fed’s Board of Governors are appointed to 14-year terms and can only be removed “for cause,” widely interpreted to mean serious misconduct—not policy disagreements. However, the law is less clear when it comes to the Fed chair’s four-year leadership term, which lacks explicit removal restrictions.
According to Reuters, no US president has ever tried to oust a Fed chair, making any such move legally uncharted territory. Several unrelated legal cases involving Trump’s past efforts to remove leaders of independent agencies are now making their way through the courts—and could serve as precedent if Trump tries to push Powell out.
What if Trump tries anyway?
In theory, Trump could attempt to remove Powell solely as chair while allowing him to remain a governor until his term ends in 2028. That would still leave Trump the opportunity to elevate another governor—potentially someone more aligned with his policy views—to the chair position.
However, Fed independence is deeply valued, even among Trump’s own appointees, such as Christopher Waller and Michelle Bowman. That complicates any assumption that a leadership shakeup would lead directly to rate cuts.
Trump has no direct control over the Federal Open Market Committee (FOMC), the panel that sets interest rates. By custom, the FOMC picks the Fed chair as its own leader, but it could, in principle, choose another member, even if Powell remains on the board.
Attempting to fire Powell entirely—as a governor—would be the boldest move. If successful, it would create a board and chair vacancy, giving Trump a chance to reshape Fed leadership in his own image. But such a step would almost certainly face a legal challenge.
Powell, a former lawyer and investment banker, has repeatedly insisted that the law protects his position. If fired, he could mount a federal court case using his personal wealth to fund the effort.
Reuters also reports that Trump has floated the idea of replacing Powell with former Fed governor Kevin Warsh, though Warsh reportedly advised against the move, urging Trump to allow Powell to finish his term, which ends in May 2026.
White House economic adviser Kevin Hassett—also rumored as a potential successor—confirmed last week that the idea of removing Powell is under review within the administration.
So—can Trump fire Powell? Legally uncertain. Politically explosive. Economically risky.
But one thing is clear: the showdown over central bank independence may be just beginning.
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