White House economic adviser Kevin Hassett confirmed on Friday that President Donald Trump is still considering the option of firing Federal Reserve Chair Jerome Powell, signaling a continued strain between the White House and the central bank. Hassett’s remarks came a day after Trump publicly criticized Powell for not cutting interest rates, accusing him of “playing politics” and claiming he could remove him “real fast.”
The potential firing raises alarms over the Fed's independence, a cornerstone of its credibility with global markets. Powell, appointed by former President Obama and elevated to Fed chair by Trump, has stated that he will not step down if asked and intends to serve through his term ending in May 2026. Legal uncertainty surrounds whether Trump can actually fire Powell, but a pending Supreme Court case on federal board appointments may influence future actions.
Trump’s criticism stems from frustration over the Fed's reluctance to lower interest rates, particularly as he ramps up tariffs that could drive inflation and slow growth. Powell and other Fed officials have cautioned that such tariffs pose economic risks, reinforcing their current wait-and-see stance on rate adjustments. The Fed has held its benchmark rate steady at 4.25% to 4.50% since December.
Hassett distanced himself from his previous opposition to firing Powell, saying new legal interpretations could change the administration’s stance. He emphasized Trump’s economic policies are boosting investment and jobs, while accusing the Fed of double standards in treating Trump-era tax cuts as inflationary but ignoring what he called Biden’s “runaway spending.”
Markets are watching closely. Experts warn that any move to undermine Fed independence could trigger severe financial volatility and increase the risk of stagflation, especially amid the unpredictable rollout of Trump’s new trade tariffs.