U.S. President Donald Trump has intensified his public campaign against Federal Reserve Chair Jerome Powell, demanding lower interest rates and declaring Powell’s “termination cannot come fast enough” in a Truth Social post on Thursday. The post marks Trump’s most explicit call to date for Powell’s removal and raises fresh questions over the future independence of the central bank.
“Too Late should have lowered Interest Rates, like the ECB, long ago, but he should certainly lower them now,” Trump wrote. “Powell’s termination cannot come fast enough!”
Trump’s remarks came just one day after Powell warned that the administration’s sweeping tariffs could drive up inflation, putting the Federal Reserve in a difficult position. In a speech to the Economic Club of Chicago, Powell suggested the Fed might be forced to choose between containing inflation and supporting economic growth—two core components of its dual mandate.
“Our independence is a matter of law,” Powell said in that speech, asserting that political pressure would not sway the Fed’s decisions. “We’re not removable except for cause. We serve very long terms, seemingly endless terms.”
The Fed’s benchmark interest rate remains between 4.25% and 4.5%, where it has held steady since late last year. Markets have priced in approximately 88 basis points of cuts for the year—about three quarter-point moves—with odds of a fourth.
Powell pushes back, affirms independence
Powell, first nominated by Trump in 2017 and reappointed by President Biden in 2022, is serving a four-year term as chair that ends in May 2026. He has repeatedly stated he would not resign if asked and has emphasised the importance of the Fed’s independence in conducting monetary policy.
“We’re never going to be influenced by any political pressure,” Powell said. “People can say whatever they want. That’s fine… But we will do what we do strictly without consideration of political or any other extraneous factors.”
Despite Powell’s firm stance, Trump doubled down later on Thursday, telling reporters:
“If I want him out, he’ll be out of there real fast, believe me. I don’t think he’s doing the job. He’s too late, always too late… Slow, and I’m not happy with him.”
Legal uncertainty over firing
The president does not have the authority to unilaterally fire the Fed chair without legal cause. The Federal Reserve Act only allows dismissal of governors “for cause,” a threshold generally interpreted to mean misconduct, not policy disagreement.
Nonetheless, Trump’s rhetoric has raised concerns that he may test the legal boundaries. According to reports, he has discussed with allies, including former Fed governor Kevin Warsh, the possibility of removing Powell before 2026. Warsh reportedly advised against it.
A Supreme Court case currently under review—stemming from Trump-era firings of leaders of other independent agencies—could redefine presidential powers over appointees, potentially affecting Powell’s position. Legal observers caution that a ruling in Trump’s favour, without a clear exemption for the Fed, could trigger market instability.
Inflation, tariffs and political blame
The president’s calls for aggressive rate cuts come amid economic turbulence fuelled by his own policies. Trump’s recent “Liberation Day” tariff package has prompted warnings from the Fed, the ECB, the IMF, and the World Trade Organization. Powell indicated on Wednesday that the tariffs could lead to a “temporary or persistent” rise in inflation, complicating the Fed’s ability to justify rate cuts.
Trump, meanwhile, continues to argue that tariffs are enriching the country and that inflation is falling.
“Oil prices are down, groceries (even eggs!) are down, and the USA is getting RICH ON TARIFFS,” Trump claimed Thursday, although recent consumer data show grocery prices remain elevated and egg prices hit record highs in April.
Global comparisons and ECB praise
Trump also referenced the European Central Bank’s decision on Thursday to cut its deposit rate to 2.25%, the seventh reduction this year, and chastised Powell for failing to act similarly. While Trump praised the ECB, ECB President Christine Lagarde declined to criticise Powell in return.
“I have lots of respect for my esteemed colleague and friend [Jerome] Powell,” Lagarde said, adding that their relationship remained “solid” and “steady.”