Trump Rules Out Ousting Powell for Now, but Keeps Pressure on the Fed

Quick overview

Although he ruled out an immediate dismissal, Trump left Jerome Powell’s future at the helm of the Federal Reserve unresolved and openly discussed potential successors.

U.S. President Donald Trump said he has no immediate plans to remove Jerome Powell as chair of the Federal Reserve, despite a criminal investigation opened by the Department of Justice into the Fed chief. Still, he warned that it is “too early” to say what his final decision will be.

“I have no plans to do that,” Trump told Reuters when asked about the possibility of ousting Powell. However, he left the door open to future action: “We’re kind of in a holding pattern with him. We’re going to determine what to do, but I can’t go into details. It’s too early.”

The investigation focuses on cost overruns tied to a $2.5 billion project to renovate two historic buildings at the Federal Reserve’s headquarters in Washington. Powell, who disclosed the probe on Sunday, denied any wrongdoing and said it represents an unprecedented attempt to pressure the Fed for not cutting interest rates as aggressively as the White House has demanded.

Powell’s term as Fed chair expires in May, though his seat on the Board of Governors runs through 2028, meaning he is not required to leave the institution when his chairmanship ends.

Fed succession and independence under pressure

Trump said he is considering nominating former Fed governor Kevin Warsh or Kevin Hassett, the current director of the National Economic Council, as potential successors to Powell. He ruled out Treasury Secretary Scott Bessent, saying he “wants to stay where he is.” “Both Kevins are very good,” Trump said, adding that he expects to make a decision “in the coming weeks.”

The investigation and political pressure on the Fed have drawn sharp criticism from Republican lawmakers—whose support will be crucial to confirming the next Fed chair—as well as from foreign economic officials, investors, and former officials from both parties. The White House, for its part, argues that any potential irregularities must be investigated.

Trump brushed aside those concerns and downplayed the risks of undermining central bank independence, a recurring worry among analysts and financial markets given its potential impact on the dollar and inflation. “I don’t care,” the president said when asked about those warnings.

Against a backdrop of persistent cost-of-living pressures and with November’s midterm elections approaching, Trump again criticized Powell for not cutting rates more quickly. “A president should have some say over Fed policy,” he said.

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Ignacio Teson

Economist and Financial Analyst

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.

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