Trump renews threat to fire Fed Chair Powell amid Supreme Court battle over agency independence

Can Trump fire Jerome Powell?

US President Donald Trump has reignited his long-standing feud with Federal Reserve Chair Jerome Powell, calling for his removal and criticizing the central bank’s latest economic report. The renewed attack comes at a pivotal moment as the US Supreme Court weighs an emergency appeal involving the president’s authority to fire leaders of independent federal agencies—an issue with far-reaching implications for the Fed’s independence.

Trump’s renewed criticism of Powell

“Powell’s termination cannot come fast enough,” Trump posted on social media, accusing the Fed chair of being “too late and wrong” on monetary policy decisions. This is not the first time Trump has publicly criticized Powell. His discontent with Powell dates back to his presidency, when he often pressed the Federal Reserve to cut interest rates.

Despite the political pressure, Powell has maintained the Fed’s independence, making data-driven decisions aimed at achieving its dual mandate of maximum employment and stable prices.

Supreme Court case raises broader questions

While Trump’s comments target Powell directly, the legal case before the Supreme Court focuses on his previous dismissal of leaders from two independent agencies—the National Labor Relations Board (NLRB) and the Merit Systems Protection Board (MSPB). These cases have now become a proxy battle over the broader question of how much control the executive branch should have over independent regulatory bodies.

Trump’s administration is urging the Supreme Court to overturn a 1935 precedent (Humphrey’s Executor v. United States) that prevents presidents from removing officials at independent agencies without cause. Doing so would significantly expand presidential powers, potentially allowing Trump or future presidents to remove agency heads like Powell over policy disagreements.

Solicitor General D. John Sauer, representing the administration, told the court that presidents should not have to wait for legal proceedings to remove officials who oppose their agenda: “The president should not be forced to delegate his executive power to agency heads who are demonstrably at odds with the administration’s policy objectives.”

Legal protections and footnote nuances

The legal battle has sparked concerns about the future of the Federal Reserve’s independence. While the case at hand does not directly involve the Fed, it raises questions about whether the same logic could later apply to its board members.

Previously, the Supreme Court upheld the precedent limiting presidential control over agencies with multi-member boards, while making exceptions for those led by a single director, like the Consumer Financial Protection Bureau (CFPB). However, even in these decisions, the court highlighted in footnotes that the Federal Reserve is a uniquely structured institution with a different historical foundation.

Justice Samuel Alito noted that the Fed’s creation was a carefully negotiated compromise between advocates of private financial control and those favoring a government-controlled bank. Its distinct structure and funding model, he argued, make it unlike other agencies.

Administration backpedals on Fed targeting

Sensing potential backlash from financial markets and judicial caution, Trump’s legal team has downplayed the Fed’s relevance in the current case. Sauer recently stated that the Fed presents a “distinct question” with a unique legal and historical context, distancing the administration’s appeal from efforts to alter the central bank’s structure.

The Department of Justice also emphasized in a brief that the status of the Fed “is not at issue here.”

Still, Gwynne Wilcox, the removed NLRB chair, warned the court of broader risks. “The independence of the Federal Reserve would become uncertain — a situation that would have dire repercussions for the market,” she stated in a filing.

What’s at stake

Although the Supreme Court is currently focused on whether Trump can keep Wilcox and Cathy Harris, the former MSPB chair, out of office during the ongoing litigation, the broader implications are clear. A ruling in Trump’s favor could give future presidents sweeping authority to dismiss leaders of agencies designed to operate independently of political influence.

Trump’s persistent efforts to undercut Powell and his public outbursts may set the tone for a legal and political showdown with lasting consequences, not just for the Fed, but for the entire landscape of federal regulatory agencies.

A ruling from the Supreme Court could come at any time.

For all the latest updates, download PGurus App.

The post Trump renews threat to fire Fed Chair Powell amid Supreme Court battle over agency independence appeared first on PGurus.