Can Trump fire Fed chairman Jerome Powell?
While President Trump may have hand-picked Jerome Powell for the job of chair of the Federal Reserve less than one year ago, he hasn’t been shy about voicing his disappointment in his performance over last few months.
On multiple occasionsOpens a New Window. , Trump has expressed his desire to terminate Powell over raising interest rates that have led to big market sell-offs. In a Christmas Eve tweet, Trump said the Fed was the only problem the U.S. economy has.
Despite the stock market’s big sell-off, does Trump have the power to fire Powell if he wanted to?
The short answer is that no one knows for sure as no president has ever attempted it before.
According to the Fed’s website, while the president appoints the Fed’s board of governors, including the chairman, the central bank derives its authority from Congress, which created the System in 1913 with the enactment of the Federal Reserve Act.
This means that the board reports to and is directly accountable to Congress but, “unlike many other public agencies, it is not funded by congressional appropriations.”
However, according to the Federal Reserve Act, the only way Trump could remove Powell or any other governor of the central bank is “for cause.” For example, if Powell broke the law that could be construed as adequate “cause” for his dismissal.
Even then, from a purely legal perspective, such a termination would have to be contested by Powell in court and then it would still fall to the courts to decide whether Trump had adequate cause for Powell’s termination.