In a significant escalation of his ongoing criticisms, US President Donald Trump has publicly demanded that Jerome Powell, the chair of the Federal Reserve, resign immediately. This statement was made via a post on Trump's Truth Social platform, where he expressed his dissatisfaction with Powell's leadership and decision-making. Trump stated, "Too Late should resign immediately!!!," indicating his frustration with the current economic situation and the Fed's monetary policy.
Trump nominated Jerome Powell to lead the Federal Reserve during his first term as president. However, since then, he has consistently criticized Powell for not implementing aggressive interest rate cuts. The president's calls for Powell's resignation come amidst a backdrop of economic concerns and rising inflation, with many believing that lower interest rates could stimulate economic growth.
Despite Trump's vocal criticisms, it remains uncertain whether he possesses the legal authority to remove Powell from his position. Earlier this year, Trump claimed he had no intention of firing the Fed chair. Powell has reiterated his commitment to his role, asserting that he would not step down even if the president requested it. According to a landmark US Supreme Court ruling in 1935, members of independent federal agencies like the Federal Reserve can only be removed for cause before their terms expire.
During a recent meeting of central bankers in Portugal, Powell noted that the Federal Reserve would have likely cut interest rates by now if not for the economic impact of Trump's tariff policies. When asked whether US interest rates would have been reduced this year without the administration's plan to increase tariffs on various countries, Powell confirmed, "I think that's right." This statement highlights the intricate relationship between fiscal policy and the decisions made by the Federal Reserve.
When contacted by the BBC for a comment regarding Trump’s demand for Powell’s resignation, the Federal Reserve declined to provide a statement. This silence from the central bank reflects its traditional stance of maintaining independence from political pressures.
In the past, Trump has frequently challenged established political norms, including the dismissal of several independent regulators. These actions have often led to legal battles, questioning the boundaries of presidential authority over such positions. As the situation evolves, it remains to be seen how this latest demand for Powell's resignation will influence the relationship between the White House and the Federal Reserve.
