The Trump-Powell Tension: Can the President Fire the Fed Chair?

President Donald Trump's verbal attack on Federal Reserve Chair Jerome Powell raises questions about his authority to fire Powell if the central bank refuses to cut interest rates. Legal ambiguities remain, with no direct precedent for firing a Fed chief. The situation has raised concerns across financial markets.

President Donald Trump intensified his critique of Federal Reserve Chair Jerome Powell on Monday, over Powell's hesitance to further reduce interest rates. This ongoing conflict has unsettled financial markets amid fears that Trump might attempt to dismiss the U.S. central bank leader.

The question of whether Trump's authority extends to firing Powell remains unresolved. The Federal Reserve Act of 1913 suggests that a member of the Board of Governors can only be removed for misconduct, rather than a policy disagreement. Nevertheless, the Act does not explicitly limit the removal of the Fed chair, introducing potential ambiguity.

No clear legal precedent exists, since no president has previously attempted to fire a Fed chief. However, current lawsuits against unrelated Trump firings are being watched closely as possible indicators of this power. Any such attempt to dismiss Powell would likely be challenged in court and could carry significant implications for the Federal Reserve's independence.

(With inputs from agencies.)