Trump's big attack on Fed Reserve: Plan to sack Jerome Powell, is it so easy to take over the central bank?

New Delhi: US President Donald Trump has stirred up global financial markets by threatening to sack Federal Reserve Chairman Jerome Powell. On April 17, 2025, Trump spoke of sacking Powell "as soon as possible" on his social media platform Truth Social, after which his team is considering its legal and economic possibilities. This intention of Trump could put the independence of the Fed at risk. But is it so easy to remove Powell? Let's understand this controversy with facts.

Trump's anger: Why is Powell on target?

Trump accused Powell of not lowering interest rates and "always being late and wrong". On April 17, Trump wrote on Truth Social, "Jerome Powell's termination should happen as soon as possible. The European Central Bank (ECB) is lowering rates for the seventh time, but Powell is hurting the economy with the wrong policies." Trump claims that his tariff policies (Trump Tariffs) are making America "rich", and Powell should immediately lower rates.

However, Powell said at the Economic Club of Chicago on April 16 that Trump's tariffs would increase inflation and slow economic growth. He described the Fed's policies as data-driven and emphasized independence. Trump was upset by Powell's remarks, and he accused it of "playing politics".

Can Trump remove Powell?

Under the Federal Reserve Act of 1913, the Fed chair can only be removed for “cause,” such as incompetence, neglect of duty, or misconduct. Policy disagreement is not considered “cause.” “It is not legally possible to remove me,” Powell explained in November 2024. “If I wanted to, Powell would be out quickly,” Trump said in the Oval Office on April 17, but legal experts consider it complicated.

Trump’s team, which includes National Economic Council Director Kevin Hassett, is studying the possibilities of removing Powell. “The president and his team are looking into the matter,” Hassett said on April 18. The Trump administration is challenging the 1935 Humphrey's Executor decision in the Supreme Court, which protects the heads of independent agencies from dismissal. If this decision is overturned, it may be easier to remove Powell.

Trump's strategy and potential impact

Trump has said that he is considering Fed Governor Kevin Warsh as a possible replacement for Powell. Treasury Secretary Scott Bessent has warned that removing Powell could lead to financial market instability. International Monetary Fund (IMF) Managing Director Kristalina Georgieva said that weakening the independence of the Fed would harm global trust. Under Powell's leadership, the Fed raised interest rates by 5.5% in 2022-23, reducing inflation from 9.1% to 2.4%. But Trump's tariffs, such as a 10% tax on all imports and a 145% tax on imports from China, could cause inflation to rise again. Powell warned that this would force the Fed to strike a balance between inflation and unemployment (stagflation).

Social media and global reactions

#TrumpVsPowell and #FederalReserve are trending on social media. A user on X wrote, "Trump wants to take over the Fed, but it is dangerous for the US economy." The issue is also being discussed in India, as the Fed's policies affect global markets. ET Now Swadesh tweeted, "Trump expressed his desire to remove Powell, delay in interest rates became the reason."

India and global context

The Fed's policies are important for emerging markets like India. If Powell steps down and the Fed's independence is weakened, volatility in the US dollar and bond markets could impact the Indian stock market. India has not officially commented on the issue, but RBI Governor Shaktikanta Das has stressed the importance of an independent monetary policy.

Conclusion

Trump's intention to remove Powell is a major threat to the Federal Reserve's independence and the global economy. Legal hurdles and market volatility make it complicated, but Trump's Supreme Court strategy could change the game. Will Trump be able to take over the Fed, or will Powell retain his independence? This question will affect the future of the global economy. The next few months will be decisive in this diplomatic and legal battle.