Trump Criticizes Fed Chair Powell, Sparking Concerns Over Central Bank Independence

On April 17, 2025, President Donald Trump publicly criticized Federal Reserve Chair Jerome Powell for not lowering interest rates, suggesting potential removal from his position. This confrontation has intensified concerns about the potential erosion of the Federal Reserve's independence, a cornerstone of U.S. economic stability.

President Trump expressed dissatisfaction with Powell's reluctance to lower interest rates amid rising inflation and economic concerns linked to the administration's tariff policies. He accused Powell of "playing politics" and suggested he might seek to remove him from his position. Powell, whose term ends in May 2026, has stated he will not step down early and remains committed to the Federal Reserve's independence in setting monetary policy.

The Federal Reserve Act stipulates that the President can only remove the Fed Chair for "cause," which typically includes inefficiency, neglect of duty, or malfeasance. In Myers v. United States (1926), the Supreme Court ruled that the President has the authority to remove executive branch officials. However, Humphrey's Executor v. United States (1935) distinguished between purely executive officers and those of independent regulatory agencies, limiting the President's removal power over the latter.

The President's comments have led to increased volatility in financial markets, with concerns about potential political interference in monetary policy. The Federal Reserve's independence is considered crucial for maintaining economic stability. Interference could undermine investor confidence and affect global markets.

The escalating tensions between President Trump and Federal Reserve Chair Jerome Powell underscore the delicate balance between political leadership and central bank independence. The unfolding situation warrants close attention due to its potential implications for economic policy and market stability.