Donald Trump is not satisfied with the head of the American central bank.
Here is why: Powell, which has hurriedly reduced the federal interest rates of 75 basic points before the 2024 elections, was reluctant to further mitigate monetary conditions, citing potentially inflationist effects of the new tariff policies of the White House.
Trump has floated the idea of dismissing him for some time now. The regulator, for his part, argued since November that Trump has not had the legal authority to do so. The term Powell should end in May 2026 anyway.
“Jerome Powell was very bad for our country,” said Trump this weekend. “We should have the lowest interest rate on earth, and we don’t do it. He simply refuses to do so.”
The coalition against Powell seems to grow day by day. The director of the Federal Housing Finance Agency (FHFA)Bill Pulte accused the president of a political bias and called for an investigation by the Congress on his management.
Republican members of Congress (These senators Rick Scott and Tommy Tuberville, and the judicial president of the Jim Jordan Chamber) have also criticized Powell’s actions in recent months.
Then there is Kevin Warsh, a former governor of the federal reserve – and the potential replacement of Powell – who says it is time to “change the diet” at the Fed. (I name only a few people, but the list is long.)
Now, the federal reserve is technically independent, so Powell is protected from arbitrary dismissal and can only be deleted “for good”, which means that there must be a serious and legally justified reason to dismiss it.
Powell’s criticisms now use the $ 2.5 billion renovation of the federal reserve as a new angle of attack, alleging potential fault or Powell induced the congress in its testimony concerning the renovation. (The project was launched for years before Trump appointed Powell in 2018.)
The pressure has increased again in the last two days. Treasury secretary Scott Bessent said on Tuesday that an “official process” to replace Powell was underway. A few hours later, MP Anna Paulina Luna tweeted that Powell’s dismissal was “imminent”, sending polymarket ratings to 27%.
Rumors did not decrease Wednesday. Bloomberg and CBS reported today that Trump was trying to press the relaxation soon, while the New York Times said that the president had already written a letter.
Trump, however, immediately said that he had not planned to dismiss the president of the Fed, and even accusations of fraud about the renovation of the $ 2.5 billion head office.
Where does that leave us? Keep your eyes to the price: CME Fedwatch indicates that there are only 2.6% chance that rates drop in the next Federal Open Market Committee (FOMC) Meeting, scheduled for July 30. However, these chances increase to almost 60% for September.
