🌊 Can Trump Fire Jerome Powell?

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By Max Frost

“Powell’s termination cannot come fast enough!” President Trump wrote on Truth Social last week. He added soon after, “If I want him out, he’ll be out of there real fast, believe me.”

Then, on Friday, White House economic adviser Kevin Hassett weighed in: “The president and his team will continue to study [whether Trump can fire Powell].”

Reacting to those words, when the markets opened on Monday, a bloodbath ensued, costing $1.4T in value. 

Then, a day later, Trump pivoted to say he had no intent of firing Powell. 

“Never did,” he told reporters on Tuesday. “The press runs away with things. No, I have no intention of firing him. I would like to see him be a little more active in terms of his idea to lower interest rates.”

But Trump’s ever-changing political stances aside, we wanted to know: If Trump wants to fire Powell, could he? And what would that mean?

When the Federal Reserve Act established the Federal Reserve and its board, it specified that board members would serve 14-year terms “unless sooner removed for cause by the President.” This “for cause” removal clause has long been understood to mean a Fed board member, of which the chairman is one, can only be fired for malfeasance or neglect of duty – not simply for policy disagreements​.

This rule was intended to insulate the Fed Chair and board from political pressure – and that notion of an “Independent Fed” has since become a lynchpin of American financial stability. 

But what does “Central Bank Independence" actually mean? Why are trillions riding on it? And has any president tried to compromise it before?

Editor’s Note

Thank you for reading. Do you think Trump is bluffing or serious about this? Trump supporters: What do you think about any attempt to fire Powell? Let us know by replying to this email. We’re very curious to hear your thoughts.

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That’s it for today. See you tomorrow.

–Max and Max