Former President Donald Trump has escalated his long-running conflict with federal Reserve chair Jerome powell, publicly demanding Powell’s immediate resignation. The outspoken call, made on Trump’s social media platform, reignites tensions surrounding the independence of the U.S. central bank and its monetary policy decisions, particularly concerning interest rates. This latest push for Powell’s departure comes amid specific allegations from a federal housing regulator regarding the Fed Chair’s congressional testimony.
Trump’s Demand and the Building Controversy
The immediate catalyst for Trump’s renewed call for resignation appears linked to accusations raised by Bill Pulte, the director of the Federal Housing Finance Agency (FHFA). Pulte has publicly urged Congress to launch an investigation into Chairman Powell. Pulte’s grounds for this investigation include alleged “political bias” and “deceptive Senate testimony.” These claims specifically relate to Powell’s recent statements under oath about a multi-billion dollar renovation project at the Federal Reserve’s Washington headquarters.
Pulte asserted on social media that Powell made “factually inaccurate statements” during Senate testimony about the details and costs associated with the $2.5 billion renovation. He cited claims of potentially extravagant features like a private dining room, elevator, skylights, water features, and a roof terrace. Pulte labeled this situation a “$2.5B Building Renovation Scandal” and argued that Powell “lied when asked about the specifics before Congress.” Pulte suggested this alleged misconduct constitutes “malfeasance” and could potentially serve as sufficient “cause” for Powell’s removal.
Responding on his Truth Social platform, Trump referenced a news article detailing Pulte’s call for investigation. Adding his own commentary, Trump wrote, “‘Too Late’ should resign immediately!!!” The nickname “Too Late” is one Trump has frequently used for Powell.
A Pattern of Disagreement Over Interest Rates
While the building renovation controversy provided the immediate spark, Trump’s demand for Powell’s resignation is deeply rooted in a persistent disagreement over the Federal Reserve’s approach to interest rates. Trump has long criticized Powell for not cutting interest rates more aggressively and sooner. He contends that the Fed’s cautious stance keeps rates “artificially high.”
Trump argues that higher interest rates impede economic growth. He believes lower borrowing costs would significantly stimulate business and consumer activity. He has also consistently downplayed concerns about inflation, suggesting that Powell’s focus on price stability is exaggerated. Trump has asserted that the Fed’s rate policy is costing the United States “a fortune,” potentially hundreds of billions of dollars. Earlier, Trump reportedly sent a direct note to Powell reiterating these points and demanding a substantial rate cut.
Lowering interest rates generally stimulates economic activity. However, it can also fuel inflation. Central banks like the Federal Reserve are tasked with balancing these competing objectives: promoting maximum employment while maintaining stable prices.
Powell’s View on Rate Decisions and Tariffs
Federal Reserve Chair Powell has offered his perspective on the Fed’s recent interest rate strategy. Speaking at a meeting of central bankers, Powell indicated that the Fed likely would have cut rates again sooner if not for the impact of the Trump administration’s tariff policies. He explained that the prospect of sharp tariff increases on goods from around the world significantly influenced inflation forecasts for the U.S. economy.
Powell described the Fed’s approach as a “wait-and-see” strategy. This was necessary to assess the potential inflationary impact of the proposed tariffs. He clarified that the Fed did not “overreact” or “react at all” but simply took time to understand the economic consequences of the trade policies. This suggests a view from the Fed that Trump’s own policies contributed to the conditions that led to the Fed holding rates steady, a move Trump has repeatedly criticized.
The Legal Battleground: Removing a Fed Chair
The ability of a U.S. President to remove the Federal Reserve Chair is legally complex and constrained. Unlike cabinet secretaries, the Fed Chair is appointed to a specific term and serves on the Board of Governors. Federal law states that a member of an independent federal agency like the Federal Reserve Board can only be removed before their term expires “for cause.”
A landmark U.S. Supreme Court ruling from 1935 established this principle, interpreting “for cause” to mean significant misconduct. Examples typically cited include neglect of duty, inefficiency, or malfeasance – actions related to the proper execution of office, not policy disagreements. Legal experts widely interpret this to mean a president cannot fire the Fed Chair simply because they disagree with monetary policy decisions.
Jerome Powell’s current term as Federal Reserve Chair is scheduled to end in May 2026. He would continue to serve as a member of the Board of Governors until February 2028. Powell himself has previously stated he would not resign if asked by the president. He has also maintained that forcing him out is “not permitted under law.”
Despite these legal limitations, Donald Trump has a history of challenging established political norms. During his first term, he fired other independent regulators, actions that have sometimes faced legal challenges and generated debate about executive authority. Any attempt to remove Powell based on policy differences or potentially the current allegations would likely trigger a protracted and significant legal battle.
Ongoing Tensions and Future Prospects
The public clash between Donald Trump and Jerome Powell has been a recurring feature since Powell’s nomination by Trump in 2017. Despite the frequent criticism, Trump had previously stated he had “no intention of firing him,” although he has also made conflicting statements and reportedly considered potential successors.
The Federal Reserve has largely maintained a public silence regarding Trump’s criticisms and demands. When contacted for comment on the latest remarks, a representative for the Fed declined to respond.
The situation underscores the persistent tension between a former president intent on influencing monetary policy and an independent central bank mandated to make decisions based on economic conditions, shielded from political pressure. The latest development, incorporating specific allegations related to official conduct, adds a new dimension to the ongoing conflict. The potential for Congressional investigation, as requested by Bill Pulte, looms as a next step in this unfolding drama.
Frequently Asked Questions
Why does Donald Trump want Jerome Powell to resign?
Donald Trump primarily seeks Jerome Powell’s resignation due to persistent disagreement over U.S. interest rate policy. Trump believes Powell has kept interest rates too high for too long, hindering economic growth. He wants lower rates to stimulate the economy. More recently, Trump also endorsed calls for Powell’s resignation following allegations from a housing regulator that Powell provided “deceptive testimony” to Congress regarding renovations at the Federal Reserve headquarters.
What are the legal grounds for removing the Federal Reserve Chair?
Under U.S. law and established legal precedent, the Federal Reserve Chair cannot be removed by the president based on policy disagreements. The law allows for removal only “for cause,” which is interpreted by a 1935 Supreme Court ruling to mean serious misconduct such as neglect of duty or malfeasance related to the execution of office. Any attempt to remove the Chair for reasons other than “for cause” would likely face significant legal challenges.
How does the Federal Reserve’s independence protect it from political pressure?
The Federal Reserve was established in 1913 as an independent central bank. This independence is intended to shield it from political influence, allowing it to make monetary policy decisions based solely on economic data and conditions. This structure is designed to ensure decisions about interest rates and the money supply are made to benefit the long-term health of the economy, rather than short-term political goals. Legal limits on removing the Chair further reinforce this independence.
Conclusion
Donald Trump’s demand for Federal Reserve Chair Jerome Powell’s immediate resignation marks a significant re-escalation of a long-standing conflict. Driven primarily by disagreements over interest rate policy, the latest call incorporates new allegations concerning Powell’s congressional testimony. While the legal framework for removing a Fed Chair is designed to protect the central bank’s independence from political pressure, the ongoing tension and the possibility of further investigation highlight the unique position of the Federal Reserve within the U.S. government structure. The situation remains a key point of interest for those tracking U.S. politics, economic policy, and the dynamics between the executive branch and independent agencies.
