Donald Trump, President of the United States, is evaluating the possibility of dismissing Jerome Powell, the current head of the Federal Reserve. This intention was confirmed by Kevin Hassett, the White House's chief economic advisor, who stated that the president's team is considering options regarding this possible change at the top of the Central Bank. This declaration came after Trump issued strong criticisms of Powell's management, thus reviving a tension that has been building between the two for years.
Although Trump does not have the direct power to remove the chairman of the Federal Reserve, the law allows for the initiation of a procedure under certain conditions if just cause is demonstrated. Hassett assured that the analysis of the case is still ongoing, keeping open the possibility of an institutional confrontation that could trigger a new controversy between the White House and the Federal Reserve. This situation puts at the center of the debate the limit of presidential power over autonomous institutions.
Trump has repeatedly expressed his dissatisfaction with Powell's decisions, whom he nominated himself in 2017 during his first term. In particular, the president has questioned Powell's reluctance to lower interest rates, a measure that Trump considers crucial for stimulating the economy. On various occasions, he has labeled the Federal Reserve chairman as an obstacle to economic growth and has even described him as an enemy of financial progress.
During a recent public intervention, Powell warned that the tariff policies driven by Trump could raise prices and slow economic growth. This stance was not well received by the president, who, the following day, intensified his attack, declaring that he was determined to achieve Powell's ousting. His words reflected a firm intention: He will leave very quickly, believe me, he stated in front of the media.
The possibility of ousting Powell is not simple. The Federal Reserve was conceived as an independent entity, precisely so that monetary policy decisions would not be influenced by political cycles. This institutional design responds to the need to maintain economic stability beyond the short-term interests of governments. This was also established by American jurisprudence, especially through the historic ruling of 1935 in the case of Humphrey’s Executor versus United States.
It is worth remembering that Powell was reappointed by Democratic President Joe Biden in 2022, extending his term beyond Trump's presidency. This complicates the situation even further, as any attempt at removal could be interpreted as a direct interference in the autonomy of the Central Bank. Additionally, such a move could provoke a loss of confidence in the markets, affecting the credibility of the U.S. financial system.
The Federal Reserve needs independence to act freely in the face of complex economic scenarios. If political interests were allowed to define its decisions, its role as a guarantor of economic stability would be seriously compromised. History has shown that independent central banks are more effective at controlling inflation and responding to economic crises without the weight of external pressures.
Finally, although the Trump administration has promoted arguments aimed at increasing presidential authority over independent agencies, judicial precedents and the possible economic consequences of weakening the Federal Reserve work against that strategy. In a context where the Supreme Court maintains a conservative majority, there is still a strong institutional defense of the Central Bank's autonomy. Therefore, while Trump could pressure and maneuver politically, the possibility of an ousting without legal grounds remains, for now, unlikely.
