In a striking escalation of his long-standing criticism against Jerome Powell, US President Donald Trump demanded in a post on his Truth Social platform that Powell should resign from his position as chair of the Federal Reserve, citing the phrase “Too Late” before stating he should quit “immediately”. This call for resignation comes amidst increasing tensions related to Powell’s management of interest rates.
Trump initially nominated Powell for the Fed’s top position during his first term, but he has since expressed frustration over Powell’s reluctance to cut interest rates, which Trump believes is essential for fostering economic growth. In a recent discussion, Powell acknowledged that the Fed would have likely lowered rates if not for the complications arising from Trump’s tariffs imposed on various countries, which have significantly impacted economic conditions.
The ongoing scrutiny of Powell intensified after a federal housing regulator suggested investigating him over what critics allege to be misleading Senate testimony regarding renovation costs of the Fed’s Washington headquarters. This situation underscores the tensions between Trump and Powell, who have both shared a tumultuous relationship since his initial appointment to the position.
Despite Trump’s pressure, Powell previously indicated that he has no intention of resigning if requested by the President, affirming that such action is not legally permissible under current US laws governing independent federal agencies. According to a foundational Supreme Court ruling from 1935, members of independent regulatory bodies can only be removed for just cause, which sets a high legal bar for dismissals.
Adding to this political fracas, Bill Pulte, the director of the Federal Housing Finance Agency and an outspoken critic of Powell, has recently called upon Congress to investigate him, emphasizing concerns regarding alleged political bias and misleading statements made during Senate hearings. In response to Trump’s comments, the Federal Reserve declined to provide any remarks, continuing its tradition of maintaining operational independence from political influences.
As President Trump steps back into the political arena, his ongoing criticisms of the Federal Reserve and its leadership may have significant implications for monetary policy and the broader economic landscape in the coming months, particularly as he rallies support ahead of the 2024 election.