Trump says firing Fed Chair Powell ‘highly unlikely’

July17,2025(MLN): U.S. President Donald Trump has indicated it is "highly unlikely" he will fire Federal Reserve Chair Jerome Powell, despite renewed speculation following reports that he raised the idea with Republican lawmakers earlier this week.

The remarks came after Trump had asked a group of GOP legislators whether Powell should be removed, comments that initially rattled stock markets and the dollar before a partial recovery when Trump appeared to dismiss the idea.

Addressing reporters at the White House, Trump admitted he had revisited the topic but said, “We’re not planning on doing anything.”

When pressed further, he added, “It’s highly unlikely unless he has to leave for fraud,” leaving the door open to future action, as BBC reported.

The president, who originally nominated Powell during his first term, has consistently criticized the Fed chief over interest rate policy, accusing him of “doing a lousy job” and calling him a “knucklehead” in his latest remarks.

Trump's allies have joined the chorus of criticism, targeting Powell for alleged mismanagement of a $2 billion renovation project for Federal Reserve buildings in Washington.

Budget Director Russell Vought last week called for an investigation into the cost overruns, and Trump hinted this could be seen as a fireable offense.

Analysts at Deutsche Bank noted the shift in focus from monetary policy to project mismanagement, suggesting the administration might be building a formal case against Powell.

The Federal Reserve, an independent institution established by Congress, has responded to the criticism by publishing updates on its website.

It explained that the cost increases stemmed from unforeseen conditions, such as the presence of more asbestos than initially estimated.

The Fed also defended the renovations, arguing they will reduce costs by consolidating operations.

Powell, whose term as Fed chair ends in May 2026 (and as a governor in 2028), has maintained he will complete his tenure, asserting that the president cannot dismiss him over policy disagreements.

Under U.S. law, a Fed governor can only be removed “for cause,” typically meaning serious misconduct.

Despite repeated threats over the years, Trump has consistently stepped back from removing Powell, usually after market reactions turned negative.

However, recent comments from Trump-aligned figures have intensified speculation.

Florida Congresswoman Anna Paulina Luna declared this week that Powell's firing was “imminent,” echoing sentiments from other Trump allies.

A senior White House official also confirmed that the president told Republicans a dismissal could be forthcoming.

The unfolding drama adds another layer of uncertainty to the global financial system, already strained by trade wars and slowing U.S. economic growth.

Trump continues to press for lower interest rates, arguing that current levels, hovering around 4.3%, are too high compared to other central banks like the European Central Bank and Bank of England, which have moved more aggressively to cut rates.

Powell, however, has cautioned against hastily lowering rates, warning that sweeping tariffs could fuel inflation.

The Fed, he maintains, must strike a balance to maintain price stability.

Economists and financial leaders have voiced concern over any political interference with the Fed. JP Morgan Chase CEO Jamie Dimon called the Fed’s independence “absolutely critical,” warning that tampering with it could bring unintended economic consequences.

Treasury Secretary Scott Bessent acknowledged a "formal process" is underway to explore a potential replacement for Powell and characterized Trump’s criticisms as “working the refs,” a reference to pressuring referees in sports.

Among possible successors floated by Trump are Bessent himself, National Economic Council Director Kevin Hassett, and conservative economist Kevin Warsh.

Powell was first nominated in 2017 by Trump, replacing Janet Yellen, and later had his term extended by President Joe Biden in 2021.

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