President Trump has reportedly drafted a letter to remove Federal Reserve Chair Jerome Powell, sources say, though he later sought input from Republican lawmakers and publicly walked back on immediate action, calling it “highly unlikely.”
What’s Going On
- Drafted firing letter: The New York Times reports Trump drafted and shared a letter with House Republicans, gauging whether he should terminate Powell .
- Then he backtracked: In a session with reporters, Trump insisted he wasn’t planning to fire Powell soon, though he didn’t rule out action if “fraud” related to the Fed’s building renovation was involved.
Why It Matters
Trump’s frustrations stem from Powell’s refusal to lower interest rates in line with Trump’s demands, compounded by political outrage over a $2.5 billion Fed renovation project—nicknamed the central bank’s “Palace of Versailles”. Trump’s renewed threats are seen by some analysts as pressure tactics, not actual legal moves.
Legal Limitations
Federal statutes grant the president the power to remove a Fed Chair only “for cause”, such as malfeasance or neglect of duty. Many legal experts and a recent Supreme Court indication affirm the Fed’s long-held independence.
Market Reaction
Financial markets responded with volatility when firing rumors first emerged, triggering a dip in futures before recovering after Trump’s clarification
