Is it OK for Trump to fire Fed Chairman Jerome Powell? |Feder

Donald Trump Tell Republican lawmakers that he plans to fire the United States Fed Chair, Jerome Powellthis will be an unprecedented move against non-partisan central banks.

Trump drafted a letter at a private meeting Tuesday night and showed it to House Republicans, according to the New York Times. The news of the stock market sinking, but it complicates the story as Trump tells reporters that it is “very unlikely” that he will fire Powell.

This is not the first time Trump says he will fire Powell, his tenure rising in May 2026, though it marks a rapid escalation of his threat.

Any move by the White House to formally fire the Fed Chairman is unprecedented. The president has always respected it in history Central Bankeven if there are differences on policies, it blocks one’s own path.

But, of course, it looks like Trump is following his script. This is what we know, Trump and Fed.

What does the Fed do?

As a central bank, the Federal Reserve mainly manages the U.S. money supply by setting interest rates. Interest rates can affect the cost of borrowing money from things like mortgages or other loans.

When setting interest rates, the Fed considers inflation and the labor market, its so-called “double mandate”: higher interest rates may reduce inflation but have a negative impact on the labor market, while lower interest rates may be the opposite.

The central bank has been working to lower inflation over the past few years since Trump’s second term, which hit 9% in June 2022.

To this end, the Fed raised interest rates to decades between 5.25% and 5.5%. Just a few years ago, at the height of the pandemic, interest rates were close to zero in 2020 and 2021.

At the end of last year, the Federal Reserve Reduced interest ratesnow at 4.25% to 4.5% – lower than the position a year ago.

The U.S. stock market is very sensitive to Fed decision-making. After September, stocks began to climb after the Fed began to lower its rate.

Why did Trump attack the Fed?

Trump’s tariffs put the economy in trouble. The stock market responded quickly and recovered from the huge taxation.

Federal Reserve officials held four meetings in January, March, May and June this year, during which they may change interest rates. In these four aspects, they refuse to base themselves on economic uncertainty.

The pause made Trump furious. Last month, Trump told Powell Handwritten notes He was “too late” and asked the Fed to lower interest rates.

“You have spent the wealth of the United States and continue to do so,” he wrote. “You should lower the rates a lot!”

From Trump’s perspective, lowering rates can offset the impact of his tariffs on U.S. stock markets. But for Fed officials, this could exacerbate inflation.

In a rare public response, Powell pointed out directly that Trump’s tariffs are the reason why the Fed cannot lower interest rates.

“When we see the size of the tariffs, we continue to put it on hold,” Powell said. explain Earlier this month. “Essentially, all U.S. inflation forecasts are substantially increasing due to tariffs.”

Recent inflation data Indicates inflation occurred in June. The annual inflation rate increased from 2.4% in May to 2.7% in June, the highest monthly LEAP since March 2024.

It’s not a good sign for the Fed’s next board meeting in late July that there might be any interest rates lower.

Can Trump legally fire the Fed chair?

The Supreme Court recently suggested that the president cannot fire the Fed chairman, which would make it impossible for Trump to fire Powell if he tries to do so.

Court Green Trump fired two officials serving on the U.S. Labor Commission, but the court went out of its way to say the Fed adopted a special constitutional protection.

“The Fed is a unique structured quasi-private entity in the unique historical tradition of the First and Second Banks in the United States,” the court wrote in May. Decide.

But the Trump administration is trying to find a legitimate solution. Trump has recently started Accusation Powell could lie to Congress about the renovation at the Federal Reserve headquarters in Washington state.

“I didn’t see him as a man who needs a palace to live in,” Trump told reporters. “One thing I never guessed is that he will spend $2 billion to build a little extension for the Fed.”

When asked if he saw it as a possible crime, Trump said: “I think it is.”

Powell has asked an inspector general to review the renovation costs, which was originally scheduled to be $1.9 billion, but has increased to $2.5 billion due to “unforeseeable conditions.” website.

What are the cases of the Fed’s independence from the White House?

The Fed has huge power over the economy and must be very cautious about every decision it makes.

The actions taken by the central bank will affect the stock market, the value of the dollar and the value of government bonds – in turn, all affect the The U.S. economy.

Regarding the Fed’s independence, Powell said officials “will only serve the American people in the best way based on our best analysis of the data and the best analysis to achieve the dual-mand goal.”

“We will do our things strictly without considering politics or any other irrelevant factors,” he said.