Could Jerome Powell be the next to face dismissal after Gary Gensler?

The Federal Reserve has been self-esteemed about sovereignty and being unbound from political influence. However, the tradition has been facing new tension as the US President Donald Trump intensified attacks and made intimidating remarks on Jerome Powell, the FR Chair, for turning down the interest cuts by quoting the example of the European Central Bank to cut its main interest rates to 2.25%, down from a high of 4%. “He wants to play cute”, says Trump, accusing Powell of “playing politics” for not lowering the rate of interest.

Back in 2017, when Donald Trump assumed the office, he nominated Jerome Powell by saying “he has earned the respect and admiration of his colleagues”. At that time “Jay” Powell was considered as the safe choice because he is a republican and Janet Yellen, then presiding Chair is a democrat. But, the situation is not the same anymore. On Thursday, in the Oval office, Trump stated to the reporters “If I want him out, he will be out of there, real fast”. The attacks represent one of Trump’s most pointed efforts yet to undermine the political independence of an 111 years old institution historically insulated from White House influence to ensure stable economic governance.

“That’s the only thing we are ever going to do,” Powell said. “We are never going to be influenced by any political pressure… our independence is a matter of law”. The FR chair added that Federal Reserve Governors “are not removable except for a cause and that we serve very long term”. Fed chair Jeromy Powell was renominated by then President Joe Biden in 2022, he is expected to continue on the same position till May 2026.

It is not happening for the first time that the President has expressed frustrations with the Fed for the interest rate decisions that clash with their policies, Trump’s remarks have upheaved concerns about government’s interferences in monetary policies, a shock that can erode Central Bank’s integrity.

Can Trump Sack Powell? Analysis of Causes and Expert Opinion

The answer is a bit intricate and unpracticed, because no Fed Chair has ever been fired by the President in the history of America. There has to be “for cause”,but that cause can be misconduct or incapacity, not the policy disagreements. “The court would typically not see disagreements over ‘interest-rate’ setting as ‘for-cause’”, says Sarah Binder, an expert on the Federal Reserve and a senior fellow at the Brookings Institution.

It is not the first time that a US President has proclaimed about firing any authority figure. In September 2008, then Presidential candidate John McCain exclaimed to remove SEC Chair Christopher Cox.

Will History Repeat Itself So Early? Market Swing and Legalities

“On day one, I will fire Gary Gensler”, said Donald Trump at the Bitcoin Conference in July 2024, just two months before election. Gensler has the reputation of being crypto skeptic, as evidenced by many crypto companies and executives that have been on sharp ends of the SEC’s regulatory activities. On 20th January 2025, Gary Gensler resigned from the Commission before getting terminated by the newly elected President, considered as ‘pro-cypto’.

Legally, Trump’s ability to fire the Chair of the Federal Reserve is very constrained, finding justification “for cause” is likely to fail before court unless “Jay” commits serious misconduct. In case of Gary Gensler SEC is an independent regulatory agency, but it's not as insulated from executive influence as the Federal Reserve. On the other hand, the Central Bank is more independent than most federal agencies to protect monetary policies from political influence. There is no legal authority for the President to remove the Fed Chair before their 4-year term ends., unless they resign or are fired ‘for a cause’, under very rare circumstances, often interpreted as malfeasance by the court. The SEC does not control money supply or interest rates and is still more subject to oversight. The market does not expect Powell to be fired. Attempting to fire him will trigger significant political volatility, as observed in 2018, when stocks dropped amid rumours of Powell’s removal.