Trump’s Push to Oust Powell Faces Legal, Practical Limits — Evening Brief – 04.21.25
President Donald Trump has escalated his attacks on Federal Reserve Chair Jerome Powell for resisting interest rate cuts, yet ousting Powell would not automatically lead to lower rates or dominance over monetary policy.
The Federal Reserve’s Board of Governors and the Federal Open Market Committee (FOMC), responsible for setting rates, operate independently, and the FOMC is not obligated to select the Fed Board chair as its head. It could opt for another candidate.
“The best bet is that Fed Chair Powell will serve out the remainder of his term -there are legal obstacles involved in firing any Fed governor and recall that the president frequently criticized the chair in his first term without making any attempt to remove him- but Trump’s comments last week are a reminder that Powell’s time in office is still likely nearing its conclusion,” Bryan Jordan, chief strategist at Cycle Framework Insights, Inc told Connect.
The Dispute
Trump recently took to social media to slam Powell, accusing him of delaying rate cuts and adding that his “termination cannot come fast enough.” According to The Wall Street Journal, Trump has been exploring Powell’s removal for months. Former Fed governor Kevin Warsh, a possible successor, cautioned against the move, while Treasury Secretary Scott Bessent highlighted risks to global markets from eroding Fed autonomy.
Trump, undeterred, claimed he could force Powell out, stating, “Oh he’ll leave. If I ask him to, he’ll be out of there. I don’t think he’s doing the job. He’s always too late, a little slow,” Trump said. Powell, however, has vowed to stay put if asked to leave.
“Powell’s current term as chair ends in May 2026 and it appears highly unlikely that he will be reappointed for another four years. This represents yet another source of uncertainty for the markets, one that will build until the next chair is selected,” added Jordan.
A New Fed Chair Doesn’t Guarantee Rate Cuts
The debate hinges on Trump’s legal authority to dismiss Powell. A 1935 Supreme Court decision (Humphrey’s Executor v. United States) restricts the president’s power to fire heads of independent agencies, though the White House is pushing to overturn this ruling. Even if Powell were removed, lower rates are not a given.
In a rare case, the FOMC could bypass a Trump-appointed Fed Board chair and elect another leader, as UBS Chief Economist Paul Donovan pointed out. The FOMC chooses its chair yearly or after a vacancy. For instance, in August 1979, when Fed chief G. William Miller was named Treasury Secretary, Paul Volcker was elected FOMC chair soon after becoming Fed Board chair. Should Powell be removed, the FOMC might select someone like New York Fed President John Williams over Trump’s choice.
Six years ago, when Trump floated replacing Powell, Fed officials reportedly vowed to “close ranks” and reelect Powell as FOMC chair, per the Journal. Powell could retain his FOMC role during a legal dispute. Gaining support for a Trump nominee might require dismissing several Fed governors, a step likely to unsettle global markets.
Ultimately, the FOMC chair has just one vote on rate decisions. Powell isn’t blocking a dovish FOMC; the committee’s forecasts show no appetite for sharp rate reductions. While the chair wields influence, a dramatic policy overhaul remains improbable.