Will Trump Fire Jerome Powell? What Will Happen in the Market If He Does?

Despite recent threats from U.S. President Donald Trump that he could fire Federal Reserve Chairman Jerome Powell, economists and lawmakers agree that such a move is unlikely to happen. However, the political pressure from Trump’s statements may influence the Fed’s decision-making process. Francesco Bianchi, an economics professor at Johns Hopkins University, told reporters that although Trump is not expected to follow through on his threats, his rhetoric on the issue could influence public perception and thus the actions of the central bank. “The Fed now knows that if there is a recession, they will be blamed,” Bianchi said, adding that Trump’s public call for interest rate cuts could increase pressure on policymakers. The debate erupted last week after Powell stated that there was no need for an emergency interest rate cut, prompting Trump to respond with a stern warning that he could fire the Fed chairman. These comments led to a sharp decline in the stock market as investors worried that the independence of the Fed was being compromised. According to Bianchi, the likelihood of Trump actually firing Powell is very low. “Powell’s term will end in about a year,” he explained. “Firing him would create significant chaos in the market, far outweighing any short-term political benefits. The market might interpret this as a sign of future interest rate hikes, rather than cuts.” In the context of increasing controversy, key lawmakers rejected Trump’s comments, including Republican Senator John Kennedy of Louisiana and a member of the Senate Banking Committee who dismissed the president’s claim of authority over the central bank. “I don’t think the president, any president, has the authority to fire the Fed chairman,” Kennedy said in an interview with NBC. “The Fed should maintain its independence.” Speaking in the Oval Office on Thursday, Trump reiterated his statement, saying, “If I call for his dismissal, believe me, he will be dismissed very quickly.” But Kennedy continues to support Powell’s approach to monetary policy, particularly the president’s focus on controlling inflation.