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By Jesus Mesa and Gabe Whisnant
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On Wednesday, President Donald Trump responded to several questions regarding recent reports that he intends to fire Federal Reserve Chair Jerome Powell over his decision to not lower interest rates.
The president seemed to deflect those questions, responding, in part, to one question, "I don't rule out anything, but it's highly unlikely [that I'll fire him]. Unless he has to leave for fraud."
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Why It Matters
The episode underscores growing tensions between the White House and the Fed, as Trump's calls for aggressive rate cuts clash with Powell's more measured stance. At the heart of the standoff is Trump's frustration that Powell, whom he nominated in 2017, has not lowered interest rates fast enough to suit the administration's economic and political priorities.
The president has publicly branded Powell a "numbskull" and "moron," and accused him of costing the U.S. "a fortune."
What To Know
The possibility of firing the Fed chair mid-term has raised questions about its legality and economic consequences. The White House is pressuring Powell over the cost of renovating Fed buildings, while Trump has been outspoken in criticizing Powell for not lowering the Fed's benchmark interest rate until the inflationary impact of the president's tariffs is reflected in the data.
"I'm only interested in low-interest people," Trump told reporters.
Trump, who campaigned on reducing prices during his bid to return to the White House, insists the economy is under control and has suggested that anyone smart enough could handle the role of Fed chair.
"It's not a tough job, to be honest, assuming you're smart," he said. "It might be one of the easiest jobs I've ever seen."
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Can Donald Trump Fire Jerome Powell?
News of his Oval Office meeting with lawmakers—where he showed them a draft termination letter and asked for their opinions—sent shockwaves through markets on Wednesday.
According to The Financial Times, the dollar fell 0.9 percent against a basket of currencies, U.S. stocks dropped to a two-week low, and Treasury yields sank as traders bet a replacement for Powell would bow to political pressure and slash rates more quickly.
Yet, legal experts say it's unclear whether a president can remove a Federal Reserve chair without cause. The Federal Reserve Act allows removal "for cause," which typically means misconduct, not policy disagreements.
Lawrence White, an economics professor at NYU's Stern School of Business, told Newsweek that Trump's campaign to remove Powell was "highly unusual and seen as an effort to reduce the Fed's independence."
"They're trying to annoy Powell enough that he says, 'I'm out of here.'"
Economic Concerns
Scott Bessent, the Treasury secretary and a former hedge fund executive, has openly floated the idea of a "shadow chair" and is widely seen as someone who would follow Trump's wishes more closely.
But legal and economic experts warn that removing Powell could backfire.
"Legally it's a gray area," said Joseph Foudy, an economics professor at NYU, told Newsweek. "The Fed chair can only be removed 'for cause,' which usually means misconduct, not policy disagreements. Even if Trump uses the renovation as an excuse, Powell could fight it in court. But the bigger issue is the market reaction. Undermining the Fed's independence could lead markets to doubt America's commitment to controlling inflation, which would push long-term rates higher."
Markets have already started reacting to the possibility of Powell's exit. Investors fled U.S. assets, worried a compliant Fed would lose credibility in fighting inflation. Long-term yields rose, and stocks fell to a two-week low.
Foudy said replacing Powell at the end of his term would likely be manageable, but an abrupt firing now could spook investors. "If it happens at the end of Powell's term, markets might shrug it off," he said. "But a sudden firing could cause rates to surge and even risk a financial crisis. There's a small but real chance it could trigger a run on U.S. assets."
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Todd Belt, a political scientist at George Washington University, agreed and stressed the institutional stakes. "The real danger here is that it politicizes something that should never be political," he told Newsweek. "The Fed was designed to be independent so presidents can't manipulate monetary policy for their own gain. Forcing out Powell and replacing him with a 'yes-man' sends a message that the U.S. economy is just another arm of the White House."
Lawrence White, an economist at NYU, recalled the last time a Fed chair was forced out decades ago and called it "a messy, unpleasant episode" that shook confidence in the institution. "This isn't just about one man," he said to Newsweek. "It's about preserving the integrity of the central bank. Leaning on Powell to vacate his seat — that crosses a line."
Belt also reflected on how Trump and Powell's relationship fell apart. "For Trump, it's always: what have you done for me lately?" he said. "He sees other central banks cutting rates and wonders why the Fed isn't doing more for him. But the Fed's job isn't to serve the president — it's to keep inflation and unemployment in check over the long term."
What People Are Saying
Donald Trump, President of the United States, told reporters: "I don't rule out anything, but it's highly unlikely [that I'll fire him]. Unless he has to leave for fraud."
Todd Belt, political science professor at George Washington University, told Newsweek: "The real danger here is that it politicizes something that should never be political.
Lawrence White, economics professor at NYU, told Newsweek: "It was a messy, unpleasant episode that undermined confidence in the institution. This isn't just about one man. It's about preserving the integrity of the central bank. Leaning on Powell to vacate his seat — that crosses a line."
What Happens Next
Even if Trump succeeds in replacing Powell with Bessent, the Federal Open Market Committee—a 12-member body—would still have a say, limiting how much damage one chair can do.
Update 7/15/25, 11:34 p.m. ET: This article has been updated with additional information.
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