Trump Pressures Fed Chair Powell as Firing Rumors Intensify

Tensions are escalating between President Donald Trump and Federal Reserve Chair Jerome Powell. Trump has repeatedly criticized Powell for refusing to slash interest rates further, especially after Powell cut rates by 75 basis points before the 2024 election. Powell cites inflationary risks tied to new tariff policies as the reason for his caution.

Trump has openly suggested removing Powell, although the Fed chair maintains Trump lacks legal authority to do so. Powell’s term ends in May 2026, and under U.S. law, he can only be dismissed “for cause.”

Recent developments have amplified the pressure. Federal Housing Finance Agency director Bill Pulte accused Powell of political bias and urged Congress to investigate. Republican lawmakers, including Senators Rick Scott and Tommy Tuberville and House Judiciary Chair Jim Jordan, have also voiced criticism.

Former Fed governor Kevin Warsh, rumored to be a possible successor, called for a “regime change” at the central bank. Meanwhile, Powell faces scrutiny over a $2.5 billion renovation of the Fed’s headquarters, with critics alleging misconduct despite the project being approved years before Powell’s appointment in 2018.

Treasury Secretary Scott Bessent confirmed on Tuesday that a formal replacement process had begun. Later that day, Congresswoman Anna Paulina Luna declared Powell’s firing “imminent,” pushing prediction market odds to 27%.

Although Trump later denied plans to fire Powell and dismissed the renovation controversy, speculation continues. Bloomberg and CBS report a decision is imminent, while The New York Times claims a dismissal letter is already drafted.

Market watchers remain focused on rate cuts. CME FedWatch shows just a 2.6% chance of cuts at the July 30 FOMC meeting, but a 60% probability for September. All eyes are now on what Trump’s next move will be.