Trump says he discusses firing Fed’s Powell, but “extremely unlikely” he will

President Donald Trump said he would “extremely unlikely” fire the U.S. Central Bank head of the U.S. after hours asking whether lawmakers should fire Jerome Powell.

Stock markets and the dollar slipped after they proposed the idea with Republicans on Tuesday, but he quickly rebounded after downplaying the discussion.

Dismissing the Fed’s chairman would be a major break for the precedent.

Trump repeatedly called on Powell to lower U.S. interest rates amid a series of highly critical outbreaks that continued on Wednesday, when the president called him a “knuckle head” and claimed he was “doing bad jobs.”

Speaking at the White House, the president admitted that he had resumed discussions about the firing of Powell, who nominated the position during his first term – but said he “did not plan to do anything.”

He said to whether he had to leave the idea or not: “It is extremely unlikely unless he had to leave the fraud.”

The president’s allies joined the attack on Powell by accusing the central bank boss of inappropriate renovation of the Fed’s property.

Last week, budget director Russell Vought called for an investigation into a $20 billion (£1.5 billion) cost overrun to renovate the Fed’s building in Washington. Trump said earlier this week that he thought it was a “somewhat” crime.

Deutsche Bank analysts say the focus of the attack has changed recently, indicating that the government is filing a lawsuit against Powell.

“Whether the president chooses to take action on this case is an open question,” they wrote, noting that recent developments indicate that risks have risen.”

The Fed was established by Congress and has the power to formulate policies independent of the White House.

Powell’s second term as the Federal Reserve chairman will end next May, and he can continue to serve as governor of the central bank until 2028.

Under federal law, a president can be removed before the end of a clause “for reasons”. The phrase usually means serious misconduct.

Powell has repeatedly stated that he intends to serve as president for the term, denied Trump’s right to fire him over policy differences.

The Fed also opposes criticism of the renovation, updating its website through information to deal with certain attacks.

It said the renovation will ultimately reduce costs by allowing it to merge operations and blame it on “unforeseen conditions” such as asbestos more than expected.

Trump has been flirting since Powell’s tenure, When he objected to the Fed raising interest rates. However, he has repeatedly stepped back from the plan with investors’ attention, including this spring’s recent.

But on Tuesday, Republican Rep. Anna Paulina Luna, from Florida, wrote on social media that the firing was “coming soon.” Posts from other Trump allies in recent weeks have suggested that Powell may be resigning or calling on him to go.

A senior White House official confirmed to the BBC that Trump told Republicans that Powell’s firing could happen soon.

The White House’s increasingly determined aggression against one of the world’s most important independent institutions is adding a new dimension to the fragile global financial system that has emerged from Trump’s trade war.

The U.S. economy is slowing, and economists warn that the president’s comprehensive tariffs could exacerbate inflation.

As head of the Federal Reserve, Powell plays a key role in helping determine the decision of the central bank to set interest rates, which is the impact on the cost of borrowing the economy as a whole.

Key interest rates are currently hovering around 4.3%, lower than last year.

But the Fed hasn’t reduced it as quickly as other central banks like the European Central Bank and the Bank of England – which Trump stressed.

The president is one of those who think it should be lowered to make borrowing and bring greater impetus to the economy.

Powell said the bank was charged with keeping inflation stable and should exercise caution because of fears that tariffs could raise prices.

Many economists and investors warn that political interference in the Fed’s leadership could undermine price stability and investor confidence.

Speaking to analysts earlier this week, the head of the largest U.S. bank, warned that the Fed’s independence is “absolutely crucial.”

“Playing with the Fed often has adverse consequences, which is absolutely the opposite of what you might hope for,” said Jamie Dimon, CEO of JP Morgan Chase.

Treasury Secretary Scott Bessent said earlier this week that a “formal process” is underway to identify Powell’s replacement. He described Trump’s criticism of Powell as a “referee” – suggesting efforts to put pressure on referees in sports games.

Trump has served as a candidate. Others on the run include Kevin Hassett, who currently leads Trump’s National Economic Commission and Kevin Warsh, a conservative economist.

Powell was nominated for Trump’s Fed in 2017, replacing Barack Obama’s appointment with Janet Yellen.

Former President Joe Biden extended his term in 2021.