The Federal Reserve chairman, Jerome Powell, is that someone.
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April 17, 2025, 11:15 AM ET
Can the U.S. president fire the chairman of the Federal Reserve because he does not like the job the chairman is doing?
Once upon a time, the answer was a well-understood no. The Federal Reserve was created by Congress. The founding statute guaranteed the Fed’s independence. Chairman Jerome Powell repeated that conventional answer at the Economic Club of Chicago only yesterday: The chairman cannot be removed for policy reasons.
But once upon a time, Americans believed that the president could not fire the head of the FBI for policy reasons. Every president from Jimmy Carter to Barack Obama cohabited with an FBI director who had been appointed by a predecessor. The only exception came in 1993, when President Bill Clinton inherited from George H. W. Bush both an FBI director and a recommendation from the outgoing Bush administration to fire that director for allegedly abusing expense accounts. An embarrassed Clinton maneuvered for months to persuade the director to resign voluntarily, and dismissed him only after the director repeatedly refused.
Then came Donald Trump. Trump forced out two FBI directors because they would not follow his orders: James Comey at the beginning of Trump’s first term and Christopher Wray at the beginning of the second one. Wray was a Trump appointee whom President Joe Biden left in place for all four years of his term. Trump decided that Wray was not obedient enough and, after Wray’s resignation, replaced him with a loyalist, Kash Patel. Fifty-one of 53 Republican senators voted to confirm Patel, as unqualified as he was. And with that, the tradition of FBI independence was snuffed out.
So tell me again how Trump cannot fire the head of the Federal Reserve?
Read: A loophole that would swallow the Constitution
Like Wray, Powell was appointed during Trump’s first term. The Fed chairman was then renominated by Biden in 2021 and reconfirmed in the Senate by an 80–19 vote in 2022. As that record indicates, Powell’s management of U.S. monetary policy has won broad bipartisan approval.
Not from Trump, however. The president faces an urgent problem: His trade war against almost every country on Earth is going badly. U.S. financial markets are in turmoil. Trade is withering. Consumer confidence is plunging. Layoffs are beginning. As Trump’s policies wreak havoc, the policies’ author needs an excuse and someone to blame. Powell is that someone.
Trump’s all-purpose remedy for economic trouble is cheaper money. When Trump’s first-term trade war crashed the stock market in the fall of 2018, Trump demanded interest-rate cuts to rescue him from his own mistake. In a November 2018 interview with The Washington Post, Trump complained:
I am not at all happy with the Fed. I am not at all happy with my choice. I think we have to let it go. You know, if you look at—China is being accommodative. The euro and Europe is being accommodative. We’re not getting any accommodation, and we’re also paying $50 billion, we’re paying down our liquidity, is—you can make the case it’s a positive thing in one way, but another thing, it snaps your liquidity. So I’m doing deals, and I’m not being accommodated by the Fed. I’m not happy with the Fed. They’re making a mistake because I have a gut, and my gut tells me more sometimes than anybody else’s brain can ever tell me.
The numbers and the syntax in that quote are gibberish, but the emotion is real. Just in case anybody missed the point, Trump made it personal, saying he was “not even a little bit happy” with his selection of Powell for Fed chairman.
As a businessman, Trump spent a lot of his career profoundly in debt. His bankers often bailed him out, and he seems to believe that the Federal Reserve should do the same for his presidency.
But the Fed has a mandate to preserve price stability. Trump’s trade war threatens enormous price increases for American businesses and consumers. The trade war is also scaring investors into dumping dollar-denominated assets. U.S. bond prices are falling, and the value of the dollar itself is tumbling. Trump has thrust the Fed into a terrible dilemma, one last encountered during the stagflation that occurred in the 1970s. The Federal Reserve can control only short-term rates; a short-term cut during a period of inflation will frighten investors into expecting even higher inflation in the future, and drive up long-term rates. The Fed can change the price of overnight lending, but the markets decide the price of 30-year mortgages. And if the Fed presses down too hard on the lever it does control, that will force an upward surge by the lever it does not control.
The rescue that the economy needs is a change not in monetary policy but in Trump’s economic aggression against trading partners. End the tariffs, let trade recover, and then the Fed can do its convalescent work. But intelligent policy begins by admitting that Trump’s policy was stupid—and Trump will not soon admit that. So Powell must be fingered as the fall guy instead.
Trump has fired the heads of other supposedly independent agencies. A challenge to those firings is heading to the U.S. Supreme Court. The Court has already refused interim relief for the challengers, raising the question of whether they will win their appeal. Perhaps the Court will feel differently about the independence of the Federal Reserve from the way it does about the independence of the National Labor Relations Board or the Merit Systems Protection Board. It may search for some ingenious distinction between the Fed and all the other agencies; it may even find one.
But until that decision comes, if it comes, markets need to anticipate the high probability that Trump will install some Patel-like sycophant at the Federal Reserve in the same way that he has debauched and politicized the FBI. Both acts would once have seemed impossible. But the FBI’s independence has already been destroyed, and the Fed’s seems fated to follow.
