Trump Signals Low Likelihood of Firing Fed Chair Powell

The president said it’s ‘highly unlikely’ that he would fire Powell unless the Fed chair had to ‘leave for fraud.’

President Donald Trump looks on as his nominee for the chairman of the Federal Reserve Jerome Powell takes to the podium during a press event in the Rose Garden at the White House in Washington on Nov. 2, 2017. Drew Angerer/Getty Images

President Donald Trump said on July 16 that he was not planning on firing Federal Reserve Chair Jerome Powell, following weeks of criticism directed at the central bank chief for not lowering interest rates.

Trump has repeatedly left the possibility of ousting Powell on the table, with Treasury Secretary Scott Bessent telling Bloomberg Television on Tuesday that the “formal process” for selecting a successor to Powell is already underway.

Powell, who was nominated to chair the Fed in 2017 by Trump, began his second term in 2022. His term expires in May 2026.

Bloomberg reported early Wednesday that Trump was likely to fire Powell soon, leading to a drop in stocks and the dollar, and an increase in Treasury yields.

Trump denied the report but said he had discussed the topic of ousting Powell with Republican lawmakers on Tuesday evening.

“I don’t rule out anything but I think it’s highly unlikely unless he has to leave for fraud,” Trump said, referring to recent criticism from the White House and GOP lawmakers that renovation costs on the Fed’s headquarters in Washington have climbed to $2.5 billion.

Office of Management and Budget (OMB) Director Russ Vought called it an “ostentatious overhaul” in a letter addressed to Powell on July 10.

The Fed has responded to criticism of its handling of the renovation project, which includes “major structural work to bring the buildings up to modern code, including current accessibility, security, and safety standards” and “complete replacement of antiquated systems such as electrical; plumbing; Heating, Ventilation, and Air Conditioning (HVAC); and fire detection and suppression systems.”

The central bank also denied Vought’s allegation that the renovation includes “VIP elevators” and said the project should reduce costs for the Fed, due to it previously needing to rent space at commercial buildings to support operations.

Last month, Trump told reporters at the NATO Summit that he had several candidates whom he is considering to replace Powell.

Some of the top contenders for the position are reportedly Bessent, current Fed Gov. Christopher Waller, former Fed Gov. Kevin Warsh, and National Economic Council Director Kevin Hassett.

Trump said he was frustrated with Powell for not having already lowered interest rates amid moderate inflation and a strong job market, as doing so would help the United States lower the cost to pay off its debt, due to the interest levels.

“Instead of paying $900 billion, we don’t want to pay 900 just because he doesn’t want to lower the rate,” Trump said.

Recent projections by the Congressional Budget Office show the net interest on the federal debt will amount to $952 billion in 2025.

Powell has said the Fed is not in a hurry to lower interest rates yet due to uncertainty over price increases from Trump’s tariff policies, particularly since the final levels have yet to be set by the president.

“Expectations of that level, and thus of the related economic effects, reached a peak in April and have since declined,” Powell told Congress in late June. “Even so, increases in tariffs this year are likely to push up prices and weigh on economic activity.”

Those impacts could take months to materialize, Powell said, and he believes someone in the supply chain will eventually pay the higher levies and that “some of that is going to fall on the consumer.”

“We’re just waiting to see more data on that,” he said.

Last month saw U.S. inflation register its largest increase in the past five months, climbing to an annual rate of 2.7 percent. Core inflation is expected to reach 3.1 percent.

Bessent told Bloomberg Television on Tuesday that he “wouldn’t put too much emphasis on one number.”

Andrew Moran, Tom Ozimek, and Reuters contributed to this report.