Donald Trump’s return to the White House has reignited old tensions with the Federal Reserve. At the center is Jerome Powell, the current Fed Chair and a frequent target of Trump’s criticism during his first term. Now, just months into Trump’s second presidency, speculation is mounting that Powell may be removed — a move that would be unprecedented, legally complex, and potentially market-shaking.
Trump’s Renewed Pressure on Powell
Trump and Powell have a well-documented history. In 2018 and 2019, Trump repeatedly criticized Powell for raising interest rates, at one point calling the Fed “a bigger problem than China” on Twitter. While he ultimately didn’t follow through with attempts to fire Powell then, the current tone from his allies has raised eyebrows.
In a July 2025 post on Truth Social, Trump wrote:
“Powell spent BILLIONS on a federal palace while Americans can’t afford homes. Embarrassing! The Fed needs new leadership — fast.”
Source: https://truthsocial.com/@realDonaldTrump
That post refers to a $2.5 billion renovation of the Fed’s Washington headquarters — a project launched before Trump returned to office, but one that has become a political flashpoint.
Can Trump Actually Fire Powell?
Under U.S. law, a sitting Federal Reserve Chair can only be removed “for cause.” Legal scholars interpret this as serious misconduct or neglect of duty — not just disagreement over policy. No president has ever fired a Fed Chair in modern history. Doing so could provoke a legal battle over central bank independence, something markets typically prize highly.
Still, the “malfeasance” narrative being promoted by some Trump allies appears aimed at building a legal pretext. Conservative think tanks and legal commentators have argued that excessive spending — like the Fed’s headquarters budget — could qualify as such, though many constitutional experts disagree.
How Markets Are Reacting
Despite the political noise, markets have so far remained stable. The S&P 500 has hovered near record highs, and bond markets have shown little fear premium. This suggests that investors are either discounting the possibility of Powell’s removal or assuming a smooth policy transition even if it were to occur.
However, some hedge fund managers and analysts have warned that markets may be underpricing the risk. A surprise resignation or forced exit could unsettle investors, especially if it’s seen as political interference in monetary policy. That could trigger a drop in equities and a spike in Treasury yields — particularly on the long end.
The Political Strategy Behind the Pressure
Why would Trump push Powell out now? Timing is key. Inflation, while lower than its 2022 peak, remains sticky, and mortgage rates have stayed above 6.5%. Trump has publicly called for rate cuts to stimulate growth and ease housing costs.
Replacing Powell with someone more aligned with that view — or simply intimidating the Fed into action — could serve short-term political goals ahead of the 2026 midterms.
So far, not all of Trump’s inner circle agrees. Treasury Secretary Scott Bessent reportedly advised Trump against firing Powell, warning it could damage investor confidence and increase borrowing costs — according to anonymous sources cited on social media by journalists close to the administration.
What Are the Odds?
Although no official mechanism exists for betting on Powell’s job status in Poland due to legal restrictions, predictions shared on social media show growing speculation. For example, in a tweet dated July 17, financial analyst @TrungTPhan noted:
“Betting markets have Powell’s removal before 2026 at around 23% — not likely, but not crazy either.”
Source: https://twitter.com/TrungTPhan/status/1814319843329939480
This aligns with sentiment from crypto and fintech circles, where decentralized prediction markets (like Polymarket) indicate a rising risk — though the platform is geo-blocked in some countries, including Poland.
Who Might Replace Him?
If Powell were to resign or be removed, leading candidates floated online include:
- Christopher Waller – A current Fed Governor with dovish leanings.
- Kevin Hassett – Former Trump economic advisor and advocate of low-rate policy.
- Scott Bessent – Though recently defensive of Powell, still a trusted Trump ally with market credibility.
Any replacement perceived as politically motivated could raise concerns about the Fed’s independence and its long-term credibility — a key risk for both domestic and global investors.
While Jerome Powell’s removal remains unlikely, the fact that it’s being actively discussed — and that Trump is again openly criticizing the Fed — is enough to inject uncertainty into the markets. For now, investors appear to be betting on continuity. But with political pressure rising and the 2026 midterms on the horizon, the stability of U.S. monetary policy may not be as assured as it seems.
Key takeaway: Even if Powell stays, the mere perception of politicized monetary policy could shape market expectations for months to come.
