Trump Steps Back from Firing Powell as Fed Probe and Stubborn Inflation Raise Stakes
President Donald Trump said he has “no plan” to fire Federal Reserve Chair Jerome Powell, even as a Justice Department probe into the Fed’s $2.5 billion headquarters renovation escalates political pressure on the central bank. The investigation, which includes grand jury subpoenas tied to Powell’s congressional testimony, has raised fresh questions about Fed independence at a time when monetary policy is already under intense scrutiny.
Despite signaling no immediate move to oust Powell, Trump said it’s “too early” to determine whether the probe could ultimately give him grounds to act. He also confirmed he will move ahead with nominating Powell’s successor “in the next few weeks,” praising potential candidates Kevin Hassett and Kevin Warsh.
Meanwhile, fresh inflation data complicates the Fed’s path forward. Wholesale prices rose 3% in November, while core consumer inflation held stubbornly at 2.6% for the fourth straight month — both signs that price pressures remain sticky. Several Fed officials expect inflation to cool later this year, but differ sharply on how quickly rate cuts should follow.
With political pressure building, inflation proving persistent, and the Fed’s next leadership choice looming, the central bank’s independence and policy direction are entering a critical stretch.