Donald Trump has privately indicated he is on the verge of firing the Federal Reserve chair, Jerome Powell, rattling Wall Street and renewing questions over the US central bank’s independence.
The US president insisted on Wednesday that it was “highly unlikely” he would dismiss the Fed chair, after reports he had suggested he would and shown a draft letter dismissing Powell to political allies.
“I don’t rule out anything, but I think it’s highly unlikely. Unless he has to leave for fraud,” said Trump. The president has recently criticized Powell for a $2.5bn renovation of the Fed’s buildings. “I mean it’s possible there’s fraud involved,” said Trump.
Powell has reportedly asked the central bank’s inspector general to review the renovation.
Trump has repeatedly and publicly demanded the Fed cut interest rates to spur economic growth. Powell has so far declined, noting that Trump’s controversial rollout of tariffs has clouded the outlook for inflation.
Multiple news outlets reported that the president had openly mused about sacking Powell as Fed chair during a meeting with House Republicans, sending stocks sharply lower on Wednesday.
People present at the meeting with Trump expressed approval for Powell’s firing, CBS News reported. The president indicated he would “likely” do so soon, an unnamed White House official told the CNBC financial news network.
Trump has drafted a letter dismissing the Fed chair, according to the New York Times, which reported that he had shown this to congressional Republicans.
At a White House press event, however, Trump poured cold water on speculation that he would try to fire Powell imminently. “We’re not planning on doing it,” he said.
The benchmark S&P 500 fell sharply into the red after the initial reports, before recovering after Trump’s comments.
Price growth rose in the US last month, as the impact of Trump’s trade policy appeared to boost inflation. The president responded by again calling on the Fed to cut rates, despite policymakers so far holding off primarily due to the threat of a resurgence in inflation.
While the president has urged Powell to resign, and attacked him regularly on social media, he does not have the power to fire him over monetary policy. The supreme court signaled in May that it viewed the Fed as legally protected.
Trump initially nominated Powell to serve as Fed chair during his first term. Joe Biden then tapped him to stay on for another four years, until May 2026. Powell has repeatedly stated that he plans to do so.
