Can Trump tell Fed Reserve chair, ‘You’re fired?’
US President Donald Trump has openly discussed firing Federal Reserve chair Jerome Powell
US President Donald Trump kept up his verbal assault on Federal Reserve Chair Jerome Powell on Monday, over the Fed’s refusal for now to further cut interest rates.
The markets are growing ever more fearful that Trump may ultimately try to fire Powell.
CAN TRUMP FIRE POWELL?
Whether Trump has the authority to do so is unclear. The law says a governor can be only be removed for “cause” – long thought to mean misconduct, not policy disagreement.
HAS THIS EVER HAPPENED BEFORE?
There is no direct legal precedent, since no president has ever tried to fire a Fed chief. There are, however, lawsuits now working their way through the courts over unrelated firings by Trump being watched as possible proxies for whether he has that power.
WHO COULD REPLACE POWELL?
Like each of his predecessors, Powell holds three roles – chair of the Federal Reserve System, member of the Board of Governors and chair of the Fed’s interest-rate-setting Federal Open Market Committee. Were Trump to try to remove Powell only as chair of the Fed system, Powell could remain a governor until that term expires at the end of January 2028. The next scheduled board vacancy does not occur until January 2026, which in the meantime would leave Trump only the option of nominating one of the other incumbent governors to be chair. Two of those other six were appointed by Trump in his first term – Christopher Waller and Michelle Bowman. Both, like Powell, have spoken about the importance of Fed independence, so it’s not clear that either immediately would deliver the rate cuts Trump wants.
IF FIRED, WOULD POWELL BE ABLE TO CHALLENGE IT?
Should it occur, Powell would have the standing to challenge his firing in federal court, but he would have to fund that effort with personal resources. Powell has said repeatedly that he believes his removal is not allowed under the law.
WILL IT ACTUALLY HAPPEN?
The Wall Street Journal reported last week that Trump has discussed firing Powell and replacing him with Kevin Warsh, who served as a Fed governor between 2006 and 2011. Warsh, the paper said, has advised against that, advocating that Trump should allow Powell to remain until his term as Fed chair expires in May 2026.
With Reuters
