Trump’s Fed Ultimatum: Inside the Threat to Oust Jerome Powell

The Moment the Markets Froze

It was just after sunrise in Washington when Donald Trump, coffee in hand, told a roomful of reporters he would “love to fire” Federal Reserve Chair Jerome Powell. Within minutes, S&P 500 futures wobbled and the dollar dipped—an instant reminder that, even out of office, Trump’s words still rattle the world’s most powerful central bank.

A Long-Simmering Feud Turns Public Again

The animosity dates to 2018, when Powell—appointed by Trump—began raising interest rates. Trump fumed publicly, calling Fed policymakers “boneheads.” Four years later, the grudge is back. Speaking to business leaders in New York, Trump accused Powell of “playing politics” and keeping rates too high, stalling the housing market and squeezing consumers.

“I did the right thing by putting him there, but he’s been a disaster,” Trump said. “If I get the chance, I’d replace him in a heartbeat.”

Can a President Actually Fire the Fed Chair?

Legally, it’s murky. The Federal Reserve Act says governors can be removed only “for cause,” a phrase never tested against a chair in modern history. Markets, however, don’t wait for court rulings. Traders dumped short-term Treasurys on the mere hint of a purge, pushing two-year yields up 11 basis points—their biggest one-day jump since March.

What Investors Are Watching Next

• Whether Trump formally announces a 2024 bid—amplifying pressure on Powell.
• How Senate Republicans, who confirmed Powell 80-19 in 2022, respond to renewed attacks.
• The Fed’s September meeting, where another rate hike could reignite the feud.

Global Ripples

From Tokyo to Frankfurt, central bankers worry that politicizing rate decisions undermines dollar assets. “If independence is questioned, risk premia rise everywhere,” said one European Central Bank governor, requesting anonymity.