In brief
President Trump has issued a stark warning to Federal Reserve Chair Jerome Powell, threatening dismissal if he does not resign by May. Their strained relationship stems from Powell's resistance to Trump's calls for interest rate cuts. The feud escalates as Powell's term ends, with Republican Senator Thom Tillis threatening to block the confirmation of Powell's potential successor, Kevin Warsh, unless an investigation into Powell is dropped.
US President Donald Trump has threatened to fire Federal Reserve Chair Jerome Powell if he does not step aside at the end of his term in May. The two have been embroiled in a bitter spat over Powell's reluctance to cut the central bank's interest rate, despite Trump's repeated calls.Powell's term expires on 15 May, but he is planning to remain in post until his successor, Kevin Warsh, is confirmed by the Senate. Then I'll have to fire him, Trump told Fox Business when asked about Powell's plans to stay on in the job. I've held back firing him. I've wanted to fire him, but I hate to be controversial, he added.Thom Tillis, an influential Republican senator on the committee which oversees nominations for the Federal Reserve chair, has threatened to block Warsh's confirmation. If Warsh is not confirmed before Powell's term expires, he plans to stay on temporarily in the post. That's what the law calls for. That's what we've done on several occasions, Powell has said.Tillis has warned Trump he will not let Warsh's appointment go ahead unless a criminal investigation into Powell, linked to the renovation of the Federal Reserve building, is dropped. Senate Majority Leader John Thune stated he believed the Department of Justice should end its probe into Powell, suggesting it would be in everyone's best interest to wrap up the investigation.Another Republican senator on the banking committee, Mike Rounds, told reporters that the probe is not serving their purpose, which is to help the president get the next Federal Reserve chairman he wants. Trump expressed hope that Tillis would drop his opposition, stating, He is an American… he knows what to do, but also indicated he wasn't prepared to drop the investigation into Powell. He mentioned to Fox Business, Don't you think we have to find out what happened there? I have to find out. In light of Trump's comments, Treasury Secretary Scott Bessent conveyed optimism about Warsh's confirmation before 15 May, emphasizing that Senator Tillis wanted to do what is best for the Federal Reserve and American people.Trump accused Powell of mishandling the Federal Reserve renovation, alleging that billions were spent on a project that could have been done for tens of millions. He has previously referred to Powell as a knucklehead and criticized him after his calls for interest rate cuts were ignored. As markets reacted negatively to Trump's threats, analysts noted that firing Powell would represent a significant break with tradition, marking the first time a Federal Reserve chair has been dismissed. Trump appointed Powell in 2017 and praised his leadership, although he later expressed dissatisfaction with his performance.
