Can Trump fire Federal Reserve Chair Jerome Powell? Here’s what to know.

President Trump remains on the attack against Jerome Powell, deriding the Federal Reserve chief in a social media post on Monday as a “major loser” and pressing him to lower interest rates “NOW.”

The latest blast comes just days after Mr. Trump said on April 17 that Powell’s “termination cannot come fast enough.” On Friday, National Economic Council Director Kevin Hassett also said the Trump administration is studying whether firing Powell is an option. 

Interest rates are at the heart of Mr. Trump’s complaint about Powell’s performance, with the president arguing that the Fed should act to lower the cost of borrowing for consumers and businesses. The Fed has held its benchmark rate steady since its most recent cut in December because inflation has remained sticky, challenging the bank’s efforts to bring price increases more in line with its 2% annual target. 

Mr. Trump has pointedly contrasted the Fed’s caution in easing rates with the European Central Bank’s move on April 17 to cut its benchmark rate by a quarter of a percentage point. 

The Fed’s most potent weapon against inflation is to ratchet up or maintain higher interest rates, because an increase in borrowing costs slows economic demand, which eases inflationary pressures.

The White House declined further comment.

Here’s what to know about whether Mr. Trump can fire Powell.

Can Mr. Trump fire Powell? 

Board members of independent federal agencies like the Federal Reserve can only be forced out before their terms expire “for cause.” That was set by a landmark 1935 ruling by the Supreme Court that affirmed Congress’ authority to create such agencies. 

“The fundamental necessity of maintaining each of the three general departments of government entirely free from the control or coercive influence, direct or indirect, of either of the others has often been stressed, and is hardly open to serious question,” the court ruled in the case, Humphrey’s Executor v. United States. 

But Mr. Trump has long challenged political norms, including empowering Elon Musk to slash the federal workforce through the Department of Government Efficiency, or DOGE. Since Mr. Trump’s second term began in January, he’s also fired some independent regulators, actions that have been challenged in court. 

While lower courts found that Mr. Trump’s firing of a member of the National Labor Relations Board and a member of the Merit Systems Protection Board was unlawful, the Supreme Court temporarily halted those decisions earlier this month. 

Who appointed Fed Chair Jerome Powell?

Powell was nominated to lead the Fed by Mr. Trump in 2017, and he was re-nominated to serve another four-year term by President Joe Biden in November 2021.

What is Mr. Trump’s concern about Powell?

Mr. Trump has argued that Powell is moving too slowly to lower the Fed’s benchmark interest rates, which affects the cost of borrowing for credit cards, auto loans, and other forms of consumer and business debt. 

The Federal Reserve’s benchmark rate currently stands in a target range of 4.25% to 4.5%, the highest since 2007, according to Bankrate.

“With Energy Costs way down, food prices (including Biden’s egg disaster!) substantially lower, and most other ‘things’ trending down, there is virtually No Inflation,” Mr. Trump wrote on Monday. 

He added, “With these costs trending so nicely downward, just what I predicted they would do, there can almost be no inflation, but there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW.”

Inflation has receded from its post-pandemic high of 9.1% in June 2022, but it isn’t yet at the Fed’s goal of a 2% annual rate. In March, the Consumer Price Index rose 2.4% on an annual basis — a sign that inflation continues to percolate.

What has Powell said about Mr. Trump’s tariffs?

Powell has signaled that the Fed is keeping a watchful eye on the impact of Mr. Trump’s trade policies. In a speech last week at the Economic Club of Chicago, the Fed chief noted the Trump administration’s tariffs are “significantly larger than anticipated.”

“The same is likely to be true of the economic effects, which will include higher inflation and slower growth,” he added.

Still, Powell said the central bank can afford to wait to see how tariffs and other Trump administration economic policies play out before making any changes to interest rates.

What do investors think of Mr. Trump’s criticism of Powell?

Wall Street analysts say investors are rattled by Mr. Trump’s fierce criticism of Powell, who has earned plaudits for helping guide monetary policy so it douses inflation without causing a recession. By the end of 2024, most economists described the economy as being on firm ground, with solid growth, low unemployment and cooling inflation. 

The market shuddered on Monday as it digested Mr. Trump’s latest post about Powell, with the S&P 500, Dow Jones Composite and Nasdaq all losing more than 2%. Since the S&P 500’s most recent high in February, the index has lost more than 16% of its value, placing it in correction territory. 

“The risk is now twofold. First, that Powell holds the line and policy stays restrictive longer than markets had priced,” said Nigel Green, CEO of investment advisory firm deVere Group, in a report. “Second, that Trump intervenes — publicly or politically — sparking concerns over central bank independence.”

The Fed has historically guarded its independence, which allows it to pursue its dual mandate of keeping inflation low and the labor market at full employment without political pressure.

What has Powell said about stepping down as Fed chair?

After Mr. Trump was elected in November, Powell said he wouldn’t step down if asked by the president. Powell has also noted that, under the law, presidents may not fire or demote the Fed chair. Powell’s term as Fed chair ends May 15, 2026.

Some lawmakers and other Federal Reserve officials are coming to Powell’s defense. On Sunday, Republican Sen. John Kennedy from Louisiana defended Powell on NBC’s “Meet the Press” and added that, “I don’t think the president, any president, has the right to remove the Federal Reserve chairman.”

“The Federal Reserve ought to be independent,” he said.

Also Sunday, Federal Reserve Bank of Chicago President Austan Goolsbee said on CBS News’ “Face the Nation” that undermining the central bank’s independence could lead to higher inflation, slower economic growth and weaker hiring.

“[T]he fact is, the inflation rate is higher, growth is slower, the job market is worse,” he said. “So we really — I strongly hope that we do not move ourselves into an environment where monetary independence is questioned. Because that would undermine the credibility of the Fed.”

William English, an economist at the Yale School of Management and a former senior Fed staffer, told the Associated Press that Trump’s attacks on the Fed aren’t “going to make the American people better off over time.”

“They’ll end up in all likelihood with higher inflation, and that is not something that people want,” he said.

contributed to this report.