Published: July 17, 2025
Category: U.S. Politics · Economy
🇺🇸 Trump Reverses Course: “Highly Unlikely” to Dismiss Powell
Former President Donald Trump publicly stated on July 16, 2025, that it is “highly unlikely” he would fire Federal Reserve Chair Jerome Powell, following earlier private remarks suggesting he had considered it The Guardian+15AP News+15YouTube+15.
Although Trump had reportedly discussed dismissing Powell with a group of House Republicans and even waved a drafted letter during a meeting, he later clarified that unless there was evidence of fraud, he would not remove Powell from office The Times+4AP News+4ABC News+4.
What Trump Said (In Private and Public)
- Private Meeting: In a session with around a dozen Republican lawmakers, Trump indicated he was leaning toward firing Powell, citing frustration over inflation control and interest rate decisions from the Fed ABC News+3AP News+3AP News+3.
- Public Statement: Meeting with Bahrain’s Crown Prince, Trump commented that dismissing Powell was “highly unlikely — unless he has to leave for fraud” Reuters+6AP News+6AP News+6.
He also criticized Powell’s oversight of a $2.5 billion Federal Reserve renovation, citing cost overruns as a potential justification for removal Al Jazeera+5AP News+5New York Post+5.
Market Reaction: A Roller Coaster
Initial reports that Trump might fire the Fed chair triggered a sharp sell-off: the Dow fell ~260 points and the S&P 500 dropped about 0.5% Business Insider+1The Wall Street Journal+1.
However, after Trump’s public remarks that firing was unlikely, markets rebounded partially. Bond yields showed similar fluctuations AP News+3Business Insider+3The Wall Street Journal+3.
Bipartisan Pushback: Fed Independence
Senate Republicans Defend Powell:
- Sen. Thom Tillis (R-NC): Warned that firing Powell would undermine U.S. credibility and prompt an immediate economic backlash AP News+2Reuters+2ABC News+2.
- Sen. John Kennedy (R-LA): Praised Powell’s performance while acknowledging imperfections ABC News+2AP News+2AP News+2.
Legal Constraints:
- Experts emphasize that under the Federal Reserve Act, a Fed Chair can only be removed “for cause”—e.g., fraud or misconduct—not for policy disagreements .
Biden’s Nomination & Powell’s Tenure
Trump initially nominated Powell in 2017; he was reconfirmed to head the Fed by President Biden in 2022 .
Powell’s current term runs until May 15, 2026, and he has publicly stated his intent to serve the full duration Reuters+1Al Jazeera+1.
Why It Matters
| Impact Area | Implications |
|---|---|
| Monetary Policy | Dismissing Powell could shake confidence in the Fed’s independence and affect inflation control (Business Insider) |
| Financial Markets | The episode triggered volatility in stocks and bond markets, highlighting investor sensitivity |
| Political Ramifications | Trump’s public reversal reveals internal GOP divisions and the limits of exerting political pressure on the Fed |
Final Thoughts
Trump’s move—from considering firing Powell in a private setting to publicly ruling it out—has reaffirmed the importance of Federal Reserve independence. While the $2.5 billion renovation issue remains a point of contention, the legal and political obstacles make removal extremely unlikely. For markets and the economy, this incident underscores how sensitive financial systems are to central bank stability.
Trump says he’s ‘highly unlikely’ to fire Fed chair Jerome Powel | AP News: Trump Unlikely to Fire Fed Chief Powell, White House Confirms#TrumpNews
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