Trump Reverses Course on Firing Fed Chair Powell After GOP Talks

Tone & Political Bias: Moderately Right-Leaning

Why: Focuses heavily on Trump’s criticism of Powell and alleged bias toward Democrats, while framing the Federal Reserve as fiscally irresponsible.

Federalreserve, Public domain, via Wikimedia Commons

What Happened

President Donald Trump has backed off from earlier signals that he may attempt to fire Federal Reserve Chair Jerome Powell, despite publicly criticizing him and reportedly discussing his removal with House Republicans.

Speaking from the Oval Office on Wednesday, Trump told reporters that it was “highly unlikely” he would remove Powell, whom he accused of poor performance, political bias, and mismanagement of the central bank’s headquarters renovation project.

The Backdrop

Just a day before, Trump told House Republicans in a private Oval Office meeting that he was likely to sack Powell. He even showed them a draft letter of dismissal, according to The New York Times. CBS News also reported that he asked lawmakers whether he should proceed with Powell’s ouster.

Rep. Anna Paulina Luna of Florida later posted on X (formerly Twitter) that Powell’s firing was “imminent,” which triggered overnight sell-offs in futures markets.

On Wednesday, Trump confirmed that the meeting took place and that the conversation happened:

“I talked to them about the concept of firing him. I said, 'What do you think?' Almost all of them said I should. But I'm more conservative than they are.”

Trump's Main Criticism

Trump has for months expressed dissatisfaction with Powell for not cutting interest rates, which he claims has hurt the U.S. economy. He accused Powell of only cutting rates during the 2024 election to benefit Kamala Harris or Joe Biden.

“The only time he cut him was just before the election to try and help Kamala or Biden, whoever the hell it was,” Trump told reporters. “I think he does a terrible job. He's costing us a lot of money.”

Despite this criticism, Trump said there are no current plans to fire Powell:

“No, we're not planning on doing anything. So he's doing a lousy job. But no, I'm not talking about that. We get... to make a change in the next, what, eight months or so, and we'll pick somebody that's good.”

Legal Limitations

Under federal law and Supreme Court precedent, a sitting Fed chair can only be removed “for cause,” meaning serious misconduct or legal violations. This would make a politically motivated dismissal highly contentious and subject to legal challenge.

Still, Trump left room for that possibility:

“I don’t rule out anything but I think it’s highly unlikely unless he has to leave for fraud.”

Criticism from Within the Administration

Office of Management and Budget Director Russ Vought last week publicly criticized Powell in a letter, saying Trump was “extremely troubled” by Powell’s “mismanagement” of the Fed. Vought specifically took aim at a costly renovation of the Fed’s Washington, D.C. headquarters.

He accused Powell of misleading Congress about the project’s scope and questioned its compliance with federal law.

“Instead of attempting to right the Fed’s fiscal ship, you have plowed ahead with an ostentatious overhaul,” Vought wrote.

Trump’s Past Remarks on Powell

Trump nominated Powell during his first term but has since turned against him. He has repeatedly used personal attacks to describe Powell, calling him “very stupid,” “low IQ,” and even claiming that Powell “hates” him.

These attacks intensified as the Fed resisted Trump’s repeated calls to cut interest rates, especially in comparison to the European Central Bank, which has made multiple cuts in recent months.

Market Impact

The conflicting reports and Trump’s mixed messaging have already affected financial markets. Futures trading dipped following Luna’s post suggesting Powell's firing was imminent. Analysts say such uncertainty undermines the perception of the Fed’s independence.

The Federal Reserve, designed to operate independently of political influence, has long been considered a cornerstone of U.S. financial stability. Trump’s repeated interventions have raised alarms among economists and investors alike.