TLDR:
- Powell firmly states Trump cannot legally fire him from Fed Chair position
- Trump’s senior adviser indicates Trump may let Powell complete his term (ending May 2026)
- Fed announces new rate cut, lowering to 4.50-4.75%
- Powell avoids political commentary, focuses on economic policy
- Legal debate centers on “for cause” removal clause in Federal Reserve Act
Federal Reserve Chair Jerome Powell made his position clear during a Thursday press conference: he cannot be fired by incoming President Donald Trump, and he won’t voluntarily step down if asked.
The statement comes in the wake of Trump’s election victory and amid questions about the future leadership of the nation’s central bank.
“Not permitted under the law,” Powell stated firmly when asked about presidential authority to remove or demote Fed officials. When directly questioned if he would leave his position if requested, his answer was equally brief and definitive: “No.”
The exchange highlighted ongoing tensions between Powell and Trump, dating back to Trump’s first term in office. Despite initially appointing Powell to the position in 2017, Trump frequently criticized the Fed chair’s monetary policy decisions during his presidency.
The legal foundation for Powell’s stance rests in Section 10 of the Federal Reserve Act. This law specifies that board members can serve 14-year terms “unless sooner removed for cause by the President.” However, the statute doesn’t specifically address the chairman’s position, creating some legal ambiguity that has never been tested in court.
Legal experts generally support Powell’s interpretation, suggesting that policy disagreements alone wouldn’t meet the “for cause” threshold required for removal. This differs from cabinet positions, where officials serve “at the pleasure” of the president and can be dismissed more easily.
Trump’s previous statements have contradicted Powell’s position. During a 2020 news conference, Trump claimed, “I have the right to remove” Powell and suggested he could demote him to “a regular position, and put somebody else in charge.”
However, recent signals from Trump’s camp suggest a possible shift in approach. A senior adviser to the president-elect reportedly indicated that Trump might allow Powell to complete his term, which runs until May 2026. This represents a departure from Trump’s previous confrontational stance toward the Fed chair.
During his first term, Trump openly pressured the Federal Reserve for policy changes, including pushing for negative interest rates. His public criticism of Powell was frequent and direct, often expressed through social media posts and public statements.
The Federal Reserve continues its regular operations amid the political uncertainty. The Federal Open Market Committee (FOMC) announced a new quarter-percentage point rate cut on Thursday, setting the federal funds rate between 4.50% and 4.75%. This marks their second consecutive rate reduction.
Powell maintained a strictly professional tone during the press conference, refusing to engage with political questions. “I’m not going to get into any of the political things here today,” he stated, keeping the focus on monetary policy decisions.
Former Kansas City Fed President Esther George commented on the situation, noting that political pressure on the Federal Reserve “could be unsettling to markets.” She emphasized the importance of the Fed maintaining its independence from political influence.
Looking ahead, Trump will have the opportunity to select Powell’s replacement when his term as chair ends in 2026. Several names have emerged as potential candidates, including former Fed governor Kevin Warsh and Kevin Hassett, who previously served as a senior adviser in the Trump administration.
The Fed’s immediate policy stance remains unchanged by the election results. Powell confirmed that no immediate alterations to monetary policy are planned in response to potential policy changes under the incoming Trump administration.
The FOMC’s latest rate cut decision was unanimous, following a larger reduction in September. Powell expressed confidence in the economy’s direction, noting sustained cooling in the labor market and inflation trending toward the central bank’s target level.
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