Can Trump fire the fed chair? President lashes out at Powell for economic outlook

President Donald Trump lashed out at Federal Reserve Chair Jerome Powell Thursday for not cutting interest rates fast enough, posting on social media that Powell’s "termination cannot come fast enough."

Trump’s sharp criticism of Powell comes a day after the fed chair signaled that the Fed will keep its key interest rate unchanged while it seeks "greater clarity" on the impact of policy changes in areas such as immigration, taxation, regulation and tariffs.

During his speech to the Economic Club of Chicago on Wednesday, Powell said Trump’s tariffs are "significantly larger than anticipated."  He also noted that inflation from tariffs will likely be temporary, but "could also be more persistent."

RELATED: Powell speech: What the Fed is saying amid Trump's tariffs

"The same is likely to be true of the economic effects, which will include higher inflation and slower growth," Powell said. 

Powell's comments contributed to a drop in stock prices Wednesday.

Can Trump fire Powell? 

What they're saying:

Trump, in a Truth Social post Thursday, hinted at moving to fire Powell, whose term does not expire until May 2026. Trump has repeatedly said he wants to see longer-term interest rates lowered, but the Fed controls a short-term rate and can only indirectly affect longer-term borrowing costs, which rose after Trump announced sweeping tariffs.

RELATED: United Airlines calls economy ‘impossible to predict’ as Trump tariffs cloud business outlook

"Oil prices are down, groceries (even eggs!) are down, and the USA is getting RICH ON TARIFFS," Trump said in a social media post.

Referring to the European Central Bank, he added that Powell "should have lowered Interest Rates, like the ECB, long ago, but he should certainly lower them now. Powell’s termination cannot come fast enough!"

The European Central Bank on Thursday lowered its key interest rate from 2.5% to 2.25%.

The other side:

Powell was initially nominated by Trump in 2017, and he was appointed to another four-year term by President Joe Biden in 2022. At a November news conference, Powell indicated he would not step down if Trump asked him to resign.

He has also said that the removal or demotion of top Fed officials was "not permitted under the law."

In a 2024 mid-campaign interview with Bloomberg News, Trump said he would allow Powell to serve out his term as chair, but Trump’s aggressive and haphazard tariffs have increased the threat of a recession with both higher inflationary pressures and slower growth. That’s a tough spot for Powell, whose mandate is to stabilize prices and maximize employment. With the economy weakening because of Trump’s choices, the president appears to be looking to pin the blame on Powell.

RELATED: Billionaire hedge fund manager warns tariffs could trigger conditions 'worse than a recession'

"We’re never going to be influenced by any political pressure," Powell said Wednesday. "People can say whatever they want. That’s fine, that’s not a problem.

"Our independence is a matter of law," Powell continued. "We’re not removable except for cause. We serve very long terms, seemingly endless terms."

Supreme Court will weigh in

Dig deeper:

Trump's comments come with the backdrop of a legal case at the Supreme Court that could determine whether presidents can fire the heads of independent agencies such as the Fed.

The case stems from Trump's firings of officials from two independent agencies. The Supreme Court last week let the firings stand while it considers the case. It could issue a broader ruling this summer that would enable the president to fire Fed officials, including the chair.

Powell said the Fed is watching the case closely, adding that it might not apply to the Fed. Lawyers for the Trump administration have also argued that allowing the president to fire the two officials wouldn't erode the Fed's independence.

"It is difficult to overstate the consequences at this stressed moment of a Court ruling that found that President Trump ... does have the authority to dismiss the heads of independent agencies and did not establish a clear carve-out for the Fed," Krishna Guha, an analyst at investment bank Evercore ISI, wrote on Thursday. "If you liked the tariff debacle in markets, you’d love the loss-of-Fed-independence trade."

Trump tariffs latest

The backstory:

Trump has imposed wide-ranging tariffs that have put the U.S. economy and the Fed in an increasingly volatile spot. On April 2, the president rolled out aggressive tariff hikes based off U.S. trade deficits with other nations, causing a financial market backlash that almost immediately led him to announce a 90-day pause with a baseline 10% tariff while negotiations go forward. But Trump increased his tariff hikes on China to a rate of 145%, in addition to his existing tariffs on Canada, Mexico, autos and steel and aluminum.

RELATED: List: The cities most affected by inflation in 2025

Wall Street banks such as Goldman Sachs have raised their odds that a recession could start. The Budget Lab at Yale University estimated that the increased inflationary pressures from the tariffs would be equal to the loss of $4,900 in an average U.S. household.

Donald J. TrumpEconomyPolitics