As of April 21, 2025, President Donald Trump has ramped up his attacks on Federal Reserve Chair Jerome Powell, threatening to remove him amid economic turbulence and a looming Supreme Court decision that could ease such a move. Trump, frustrated by Powell’s reluctance to slash interest rates aggressively, recently stated, “Powell’s not doing what’s right for the country. If I say he’s gone, he’s gone—fast.” This marks a direct challenge to the Federal Reserve’s century-long independence, a principle designed to insulate monetary policy from political pressure.
Powell, initially appointed by Trump in 2018 and reappointed by President Biden in 2022, is legally protected from removal except “for cause,” a standard rooted in a 1935 Supreme Court ruling. Responding to Trump’s threats, Powell reiterated, “The law does not permit my removal without cause, and I have no intention of resigning.” He emphasized the Fed’s commitment to data-driven decisions, free from political influence, despite Trump’s public demands for immediate rate cuts.
The feud intensified as Trump’s sweeping tariffs—up to 60% on imports from China and 20% globally—have driven inflation expectations higher, complicating the Fed’s mandate to balance price stability and employment. Powell warned in a March 2025 speech that tariffs could “fuel inflation while slowing growth,” projecting inflation could hit 3.5% by mid-2025 if trade policies persist. The Fed’s benchmark rate, currently at 4.75%-5%, remains unchanged since late 2024, with Powell signaling no cuts until inflation shows sustained cooling.
Markets have recoiled at the prospect of a politicized Fed. The S&P 500 dropped 2.3% in the week following Trump’s latest remarks, with volatility spiking as investors fear eroded central bank credibility could unleash runaway inflation or economic instability. Analysts at Goldman Sachs noted, “Undermining Fed independence risks a 1970s-style inflationary spiral, with global repercussions.”
The Supreme Court’s pending ruling on Free Enterprise Fund v. PCAOB (reargued in January 2025) could reshape the legal landscape. The case questions the president’s authority to remove heads of independent agencies, potentially weakening the Fed’s protections. Legal experts warn a broad ruling could expose Powell to dismissal without clear justification, though the Fed’s unique status under the Federal Reserve Act may limit applicability.
Trump’s allies, including Vice President JD Vance, have endorsed reshaping the Fed, with Vance proposing in April 2025 that Congress reclaim authority over monetary policy. Meanwhile, Powell’s term, set to end in May 2026, hangs in the balance as Trump reportedly considers replacements like former Fed Governor Kevin Warsh, known for favoring looser policy.
This clash threatens the Fed’s global reputation as a bulwark of stability. If Trump succeeds in bending the central bank to his will, economists warn of long-term damage to U.S. economic credibility, with ripple effects across global markets. The outcome hinges on legal, political, and market pressures converging in the months ahead.