Powell clearly stated that even if Trump asked him to resign as Chairman of the Federal Reserve, he would not "be dismissed" under legal protection.

Written by: Du Yu

Source: Wall Street Journal

On Thursday, November 7, during a press conference following the Federal Reserve's scheduled interest rate cut, Powell was repeatedly asked whether he could retain his position as Chairman of the Federal Reserve during Trump's second presidential term, prompting him to lament, "I really don't intend to answer too many political questions."

For example, a reporter mentioned that some of Trump's campaign advisors suggested that if Trump, as president, asked the Federal Reserve Chairman to resign, Powell should resign. Would you step down? Powell succinctly replied with one word: "No."

The reporter then pressed, asking if he believed he was legally required to resign. Powell again answered with one word: "No."

Next, someone asked whether he believed the president had the authority to fire or demote him, and whether the Federal Reserve confirmed the legality of the president's arbitrary demotion of other Federal Reserve governors holding leadership positions. Powell stated, "The law does not allow it."

Finally, someone persistently asked whether he was concerned about Trump's ongoing criticism of Powell's performance and its impact on the independence of the Federal Reserve. Powell responded, "I will not discuss political issues today, but thank you for your question."

According to media reports, an anonymous senior advisor to Trump revealed that Trump might allow Powell to continue leading the Federal Reserve until the end of his term in May 2026, but warned that "Trump could change his mind at any time." However, in July, Trump had casually stated his intention to let Powell complete his term as Chairman of the Federal Reserve.

Gary Cohn, who served as the White House economic policy director during Trump's first presidential term, was interested in becoming the Chairman of the Federal Reserve, but sources said Cohn resigned in protest of Trump's steel tariffs, making it difficult for him to secure the position. Others mentioned that former Federal Reserve governor Kevin Warsh and former chief economist of the Trump administration Kevin Hassett were more likely candidates to succeed as Chairman of the Federal Reserve.

Public records show that during Trump's presidency, he frequently criticized the Federal Reserve and Powell, even threatening to remove him, believing that the pace of monetary policy easing was not fast enough to foster U.S. economic prosperity. In October, Trump also stated that the U.S. president should have the authority to participate in interest rate decisions and to comment on whether rates should be raised or lowered.

Trump has also criticized the Federal Reserve for its lack of transparency, arguing that the Fed's policy deliberations are conducted privately, with complete meeting minutes released weeks later. He hopes for real-time publication of FOMC meeting minutes and economic reports and desires meetings to be conducted in front of cameras.

In addition to criticizing Powell for "making many wrong decisions," last month Trump stated at an event hosted by the Chicago Economic Club that the position of Federal Reserve Chairman is one of the easiest jobs in government:

"You only need to go to the office once a month and say, 'Let's flip a coin (to decide monetary policy),' and then everyone talks about you like you're a god."

Today, Powell explicitly mentioned that the upcoming U.S. elections would not impact monetary policy in the short term, but he also warned that any changes in government could affect monetary policy as the Federal Reserve seeks to lower interest rates:

"In principle, any policy of the U.S. government or policies enacted by Congress could have economic impacts over time, and therefore, along with countless other factors, these economic impacts will be incorporated into the Federal Reserve's economic models and taken into account."

After Trump's victory, the market has lowered its expectations for an interest rate cut in January next year, with the more mainstream view being that a pause in rate cuts is likely, with the probability rising from 44% a week ago to 54%. The probability of a 25 basis point rate cut in December has slightly decreased from 77% to 67%.

Some analysts pointed out that Trump's victory has sparked speculation that the Federal Reserve may cut rates at a slower and more gradual pace, as policies to restrict illegal immigration and implement new tariffs could drive up inflation.

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