Trump's Call to Remove Fed Chair Powell: A Legal and Political Conundrum

The U.S. President Trump again stated that he would remove Federal Reserve Chair Powell. According to a report, on April 17 local time, Trump posted on his social media platform 'Truth Social' that the report released by Powell on the 16th was 'another mess'. Trump said that Powell should have lowered interest rates like the European Central Bank long ago, but he always 'acts too late and makes mistakes'. Trump claimed that Powell 'should step down as soon as possible'.

One day earlier, Powell issued a strong warning about the inflation effect of the trade policy. He said that tariff policies could lead to higher inflation and slower growth. The Fed should wait until the situation becomes clearer before considering adjusting its policy stance. The Fed will not be affected by any political pressure.

In fact, Trump has repeatedly called on the Fed to cut interest rates and implied that he would consider removing Powell from his position as Fed Chair. On April 4 local time, before Powell's speech that day, Trump posted on his social account that it was the best time for Powell to cut interest rates. Powell should stop playing politics and cut rates. On January 23 local time, Trump said that he hoped the Fed would listen to his opinions and planned to talk to Powell at an 'appropriate time'.

It was reported that Trump once said that he believed he had the power to fire Powell, 'If I want him to leave, he'll be gone soon'.

In response, Powell has repeatedly stated that the president has no right to remove him from his position and emphasized the independence of the Fed. On December 4, 2024 local time, Powell said that he was not worried about the Fed losing its legal independence, and he had not felt pressure from the White House. On November 7 local time, at the first Fed interest - rate meeting after Trump's election victory, Powell said that even if Trump asked him to resign, he would not do so, as the president lacks the power to remove him or any other Fed governor at will.

However, there are still some uncertainties about whether Trump can remove Powell.

On April 9 local time, the U.S. Supreme Court approved the temporary removal of two members of independent regulatory agencies - the National Labor Relations Board and the Merit Systems Protection Board by the Trump administration. According to an analysis, this action seems to indicate that the court supports Trump in lifting the restrictions on his power to hire and fire.

It was found that the ruling on this removal had a reversal. On March 4 local time, U.S. District Judge Rudolph Contreras ruled that Trump had no right to remove the two members of the independent regulatory agencies. On April 7 local time, before the Supreme Court might take action on the president's power over independent agencies, the appeals court ruled that the two fired members could return to work. The two fired employees were both appointed by former President Biden.

On April 9 local time, Chief Justice John Roberts of the Supreme Court signed an order to suspend the ruling made by the appeals court.

According to a magazine, the core of the above - mentioned dispute stems from the 'Humphrey's Executor' case. A 1935 Supreme Court ruling restricted the president's power to remove the leaders of independent agencies without cause. For a long time, this ruling has protected the Fed Chair from being removed, but it may soon be challenged by the conservative Supreme Court.

It was reported that conservative legal scholars have long been dissatisfied with this ruling, believing that it wrongly restricts the president's power. Roberts is a member of the conservative majority of the Supreme Court. This faction narrowed the scope of the 'Humphrey's Executor' ruling in 2020 and is likely to further narrow it or even abandon the ruling completely.

The Fed has also responded to this matter. According to a magazine, the Fed believes that the Supreme Court's ruling on the two members of the regulatory independent agencies does not apply to the Fed.

'There is no legal basis or precedent for the president to remove the Fed Chair, and it is a consensus in the industry that the Fed should remain independent,' an expert explained. The confirmation of the Fed's independent status is related to the fundamental legislation of the United States. In a sense, the Fed and the president are of the same level, while the National Labor Relations Board and the Merit Systems Protection Board are sub - committees of the executive branch, and their status is different from that of the Fed. In addition, Powell will step down in 2026, so Trump doesn't need to go to great lengths to remove him.

Previously, Michael S. Barr, the Fed's vice - chair for supervision, resigned from his position. On January 6 local time, the Fed issued a statement on its official website saying that Barr would resign from his position as vice - chair for supervision. At that time, there were speculations that this move might be related to Trump's upcoming official inauguration as the U.S. President. It was reported in October 2024 that the Trump administration had considered demoting Barr from his regulatory position.

It was reported that Barr had sought legal advice from an external law firm to explore his options if Trump removed him. On January 6 local time, Barr confirmed this report to Reuters and added that both his own lawyer and the Fed's general counsel believed that he could ultimately win the legal battle, but it would be'very unpleasant'.