- President Donald Trump has discussed firing Federal Reserve Chair Jerome Powell, whose term ends in May 2026, and considered replacing him with former Fed Governor Kevin Warsh, with talks occurring at Mar-a-Lago in February and continuing into March, per the Wall Street Journal.
- Warsh advised against ousting Powell, citing legal constraints under the Federal Reserve Act of 1913, which allows dismissal only “for cause,” a move likely to face Supreme Court scrutiny if pursued.
President Donald Trump’s ongoing friction with Federal Reserve Chair Jerome Powell has escalated, with private discussions about potentially firing Powell and replacing him with former Fed Governor Kevin Warsh, as reported by the Wall Street Journal on Thursday. These talks, which occurred at Trump’s Mar-a-Lago estate in February and continued among close associates as recently as March, reflect Trump’s persistent dissatisfaction with Powell’s monetary policy approach. Powell, whose term as Fed chair extends until May 2026, has been a frequent target of Trump’s public criticism, including repeated attacks on Thursday, underscoring the president’s desire for greater influence over the central bank’s decisions.
Warsh, who served as a Fed governor from February 2006 to April 2011 under President George W. Bush, reportedly cautioned Trump against attempting to oust Powell, advising that the Fed chair be allowed to complete his term without interference. The Federal Reserve Act of 1913 permits dismissal of Fed leaders only “for cause,” a high legal threshold that Powell himself has argued makes his firing impermissible under the law. Any attempt to remove Powell prematurely would likely trigger a legal battle, potentially reaching the Supreme Court, given the Fed’s statutory independence designed to shield monetary policy from political pressures. Trump has not finalized his decision, leaving the matter unresolved amid heightened tensions.
The discussions highlight broader concerns about the Federal Reserve’s autonomy, a cornerstone of U.S. economic stability since its establishment. Powell’s tenure has navigated complex challenges, including post-pandemic inflation and economic recovery, often drawing scrutiny from political figures seeking faster rate adjustments. Warsh, known for his hawkish views during his Fed tenure, represents a potential shift in leadership style, though his counsel for restraint suggests an awareness of the legal and economic risks of destabilizing the Fed. As Trump weighs his options, the outcome could profoundly impact market confidence and the central bank’s credibility.
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