Trump vs Powell: searching for “just cause” to remove him

The US president renews his attack on Jerome Powell and calls for a three-point cut in interest rates. Pressure also to speed up the appointment of his successor

Donald Trump is once again pointing the finger at the Federal Reserve and its chairman Jerome Powell. His removal now seems imminent in circles close to the White House, with the name of Treasury Secretary Scott Bessent circulating insistently as a possible successor.

Trump has never hidden his impatience with Powell, whom he has repeatedly called ‘stupid.’ At the heart of the president’s criticism is the demand for a drastic reduction in interest rates: “The Fed should cut rates by three points. Inflation is very low. We would save $1 trillion a year,” he wrote on Truth Social. However, this position ignores recent inflationary dynamics: in June, the price index rose to 2.7% from 2.4% in May, partly due to the tariffs imposed by Trump himself, which contribute to higher consumer costs.

The conflict between the Fed and the White House also stems from a formal issue: the president cannot arbitrarily remove the head of the central bank. That is why a “just cause” is being sought, hypothesising Powell’s responsibility for the renovation costs of two Fed buildings in Washington. Meanwhile, Trump has already called for a voluntary resignation: “I hope the Fed governor leaves, he should leave because he has been very bad for this country”.

Scott Bessent has reportedly already begun the succession process, although the president himself has acknowledged that resignation remains necessary for now.

The possibility of forced removal has raised serious concerns in the financial world. Jamie Dimon, CEO of JP Morgan, said: ‘The independence of the Fed is absolutely fundamental. Messing with the Fed can have negative consequences, the exact opposite of what one might hope for.’

This is an open challenge that risks undermining the economic credibility of the administration and the confidence of global investors.

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(Source and photo: © AndKronos)