WSJ: Trump Discussed Firing Powell Until Early March
Kevin Warsh Offered as Next Fed Chair
U.S. Treasury Argues for Guaranteeing Powell's Term and Tightens Internal Control
Trump Pressures Powell Again for Dismissal
U.S. President Donald Trump reportedly discussed with his close aides the dismissal of Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), shortly after taking office until last month. He did not hide his dissatisfaction with Powell, who warned of economic shocks caused by tariff policies, and once again mentioned dismissal, saying, "If I want, I can fire him immediately." Although U.S. Treasury Secretary Scott Baesant has taken a front-line stance opposing Powell's dismissal, there is a possibility that President Trump will push through the replacement of the Fed chairman if he makes up his mind, intensifying controversy over the infringement of monetary policy independence.
According to local media such as The Wall Street Journal (WSJ) and Politico on the 17th (local time), President Trump secretly discussed with his close aides the plan to dismiss Chairman Powell before the end of his term until last month.
Powell's term lasts until May 2026. His term as a Fed board member expires in January 2028.
President Trump met with former Fed Governor Kevin Warsh at his Mar-a-Lago resort in Florida, where he resides, to discuss the early dismissal of Chairman Powell and appointing Warsh as his successor. Warsh was also considered a candidate for Treasury Secretary in Trump's second term. However, Warsh reportedly opposed Trump's plan and argued that Powell should complete his term without any infringement on his independence.
Since his presidential campaign, Trump has opposed the Fed's interest rate hikes and mentioned dismissing Chairman Powell, and he continued his attacks several times on this day as well.
During a summit with Italian Prime Minister Giorgia Meloni in the Oval Office, the White House presidential office, Trump told reporters regarding Chairman Powell, "If I want to get him out, he would be out very quickly." He added that Powell is "not satisfactory" and criticized the interest rate policy as "political."
After Powell warned the previous day that tariff policies could lead to inflation and slower growth, Trump openly expressed dissatisfaction and pressured for dismissal. This public expression of no confidence in the head of the monetary authority could be interpreted as an attempt to embarrass him and effectively force his resignation.
Earlier that morning, President Trump also posted on his social media platform Truth Social, which he created, stating, "Jerome Powell of the Fed, who is always late and wrong, gave another typical, complete 'mess' report yesterday," and claimed, "Oil prices are falling, and even grocery and egg prices are going down. America is prospering because of tariffs." He added, "Powell should have cut interest rates long ago like the European Central Bank (ECB), but it was too late. He should cut rates now. Powell's dismissal must happen."
As President Trump launched an all-out tariff offensive, Chairman Powell, who had refrained from commenting until now, warned the previous day about the impact of tariff policies. At a Chicago Economic Club event, Powell said that the level and scope of tariff increases are beyond the Fed's expectations and that "the impact on the economy, including inflation and slower growth, will be significant." He did not hide concerns about stagflation (rising prices amid slowing growth). He said, "We may face a difficult scenario where the dual mandate of price stability and maximum employment conflicts," and, citing uncertainty, he drew a line against the possibility of interest rate cuts or liquidity supply for the time being.
Despite pressure from President Trump, Chairman Powell has stood firm, stating that the Fed's independence is a legal matter and that Trump does not have the legal authority to dismiss him.
Wall Street veteran Treasury Secretary Baesant, the 'economic commander' of Trump's second term, is also reportedly arguing that Powell's term should be guaranteed. Before the start of Trump's second term, Baesant proposed the idea of a 'shadow Fed chairman' by nominating a successor early to weaken Powell's power, but now he is working to maintain internal order and preemptively block the possibility of Powell's dismissal. This is due to growing concerns about financial market turmoil caused by infringement on the independence of the monetary authority. In an interview with Bloomberg TV earlier this week, Baesant said that the successor to Chairman Powell would be appointed in the fall and emphasized, "The Fed's independence regarding monetary policy is a jewel that must be preserved."
However, Trump’s close aides predict that although no final decision has been made yet, the possibility of dismissing Powell before the end of his term cannot be ruled out. This is because Trump mainly relies on executive orders that grant the president more power than the law, and the legal requirements related to the dismissal of the Fed chairman are unclear.
U.S. political media outlet Politico, citing sources within the Trump administration, said, "Frankly, (Powell's dismissal) is like a grenade with the pin pulled," and that Trump's accumulated dissatisfaction with Chairman Powell means "there is no guarantee at all."
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