Trump Weighs Powell Firing Amid Renovation Scandal, Rate Tensions

Trump allies weigh legal grounds for removal as markets brace for potential fed shakeup.

Federal Chair Jerome Powell, via X

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President Trump is once again considering firing Federal Reserve Chair Jerome Powell, according to multiple reports, reigniting debates over political interference at the central bank.

During an Oval Office meeting with House Republicans this week, Trump waved a draft termination letter and asked members whether he should go through with it. (NYT)

It’s the latest escalation in a long-running feud. Trump has publicly criticized Powell for months, accusing him of keeping interest rates too high and moving too slowly on rate cuts.

White House officials are reportedly exploring firing Powell “for cause,” citing alleged mismanagement of the Fed’s $2.5 billion headquarters renovation. (USA Today)

Renovation Fallout and Legal Justification

Trump allies claim Powell either lied to Congress or failed to follow permitting rules related to the costly renovation. Budget Director Russell Vought pointed to extravagant items like rooftop gardens and VIP dining rooms, though the Fed insists these claims are exaggerated or false. (USA Today)

Legal experts are split on whether the firing would hold up. Presidents can’t directly remove Fed chairs without cause, but Trump appears to be laying groundwork to argue Powell’s handling of the renovation meets that threshold.

Fed Independence on the Line

Supporters warn firing Powell could shake global markets and undermine the Fed’s credibility. “It would be an effective forced exit of a reputable Fed Chair,” said ING’s Padhraic Garvey. “Equities would likely sell off on impact, on a risk-off flight to safety trade.”

Others say the damage is already done. “It’s easy to argue the market has lost confidence in the Fed,” noted investor Nancy Tengler, who criticized Powell’s decision to raise rates in 2018, which she said led to an “intra-year bear market in response to Trump 1.0 tariffs. He was forced to capitulate months later.” (USA Today)

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Inside the Fed Fight: What Trump Said, Market Swings, and the Future of the Fed

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