Fed Chair Powell Stands Firm: Trump Cannot Legally Fire Or Demote Him

Jibran Munaf
Jibran Munaf

Image: Drew Angerer/Getty Images

Federal Reserve Chair Jerome Powell made a firm statement on Thursday, asserting that even if President-elect Donald Trump wanted to fire or demote him, the law would not permit it. Powell’s remarks came in response to questions about Trump’s previous assertions that he could remove or reduce Powell’s role if he disagreed with the Fed’s policies.

“Not permitted under the law,” Powell stated curtly, addressing the legal authority around his position. Asked if he would leave if pressured, Powell replied simply, “No.”

The issue hinges on Section 10 of the Federal Reserve Act, which allows board members to serve 14-year terms unless removed “for cause” by the president. However, the law does not specify grounds for removing the Fed Chair, and legal experts largely agree that policy disagreements do not constitute sufficient cause for dismissal. This legal ambiguity could potentially lead to conflict if Trump pursues any action to assert control over the Fed’s leadership.

Trump, who appointed Powell in 2018, has a history of criticizing the Fed Chair, including calls for negative interest rates. While he signaled in a 2020 press conference that he could remove Powell or place him in a lesser role, recent statements from Trump’s advisers suggest he may allow Powell to serve out his term, which ends in May 2026.

The Fed has reiterated its commitment to independence, with former Kansas City Fed President Esther George noting that the central bank is well-equipped to withstand political pressures. Meanwhile, Powell deflected political questions during Thursday’s press conference, emphasizing the Fed’s focus on monetary policy rather than politics and announcing a fresh rate cut aimed at supporting economic stability.