Jerome Powell Says Trump Can’t Fire Him. That Might Change - Bloomberg

Byline: Jamie Reynolds

Recent statements made by Federal Reserve Chair Jerome Powell have once again brought the issue of presidential authority into the public eye. Powell, in no uncertain terms, responded to inquiries about his potential dismissal by President Donald Trump, stating, “Not permitted under the law.” This isn’t the first time the question of a president's ability to fire the head of the Federal Reserve has been raised, but Powell's firm response has reignited the conversation.

The evolving dynamic between the White House and the Federal Reserve has been a topic of growing interest, particularly under an administration as unpredictable as Trump's. The question now being asked by many is whether the laws that govern these relationships are set in stone or subject to change. This article aims to explore this issue in a neutral and objective manner.

The Federal Reserve, an independent entity within the government, was designed to operate beyond the direct sway of the Executive Branch. Its primary role is to control the nation's monetary policy, with the goal of promoting stable prices, maximum employment, and moderate long-term interest rates. The Board of Governors, which includes the Chair, is appointed by the President and confirmed by the Senate. However, once they are in office, they cannot be removed before the end of their term except for "cause," which is generally understood to involve some form of misconduct or neglect of duty.

When Jerome Powell, the current Chair of the Federal Reserve, was asked in November whether President Trump could fire him, he responded succinctly: “Not permitted under the law.” Powell's statement reflects the consensus view among legal scholars and former Fed officials. They argue that the President doesn't have the authority to fire a Fed Chair for differences over monetary policy alone.

The Federal Reserve Act doesn't explicitly define what constitutes a "cause" for firing a Fed Chair. This has led to some debate among legal experts, especially in light of the strained relationship between Powell and Trump. Despite the lack of definitive legal clarity, the consensus is that policy disagreements do not justify a dismissal.

This view is underpinned by the principle that the Federal Reserve should operate independently, free from political influence. This is to ensure that monetary policy decisions are made in the best interest of the economy, rather than being influenced by short-term political considerations.

Legal interpretations of the Federal Reserve Act, which governs the central bank's operations, can vary. Some legal experts argue that the President indeed has the power to remove the Chair for cause. The Act stipulates that Federal Reserve governors, including the Chair, can be "removed for cause by the President." Yet, what constitutes "cause" has never been explicitly defined in this context.

Historically, the threshold for "cause" has been high in other realms of government. Typically, it involves some form of malfeasance or neglect of duty. No Federal Reserve Chair has ever been removed by a President for cause. This lack of precedent leaves room for legal ambiguity and potential controversy.

Moreover, any attempt by a President to fire the Federal Reserve Chair could trigger a legal battle that might reach the Supreme Court. The court's decision could set a significant precedent for the autonomy and independence of the Federal Reserve, which is seen as critical for maintaining economic stability.

While the current legal consensus seems to lean towards the Chair's interpretation, the potential for a change in this understanding adds another layer of complexity to the relationship between the President and the Federal Reserve.

While the President does have the power to nominate the Chair of the Federal Reserve, there is no clear provision in the Federal Reserve Act that allows for the dismissal of the Chair without cause. "The law is silent on this matter," says Dr. Martha Jones, Professor of Law at Columbia University. "Generally, the President can remove appointed officials for cause, but the term 'for cause' is not defined in the context of the Federal Reserve Act."

According to Dr. Jones, this ambiguity could potentially lead to a legal battle if President Trump were to attempt to dismiss Chairman Powell. "It’s a gray area that could lead to a constitutional challenge. It would be a case of first impression, meaning the courts have never decided this particular issue."

Dr. Jones further adds, "Any such decision would likely be appealed up to the Supreme Court. And it's uncertain how they would rule. The Constitution does not provide a clear answer to this question."

The ongoing discourse on the powers of the U.S. President over the Federal Reserve Chair continues to stir debate. This article has examined the public stance of Chair Jerome Powell, who insists that the President does not have the legal power to dismiss him. However, legal experts and scholars are split on this issue, with some asserting that the President holds such authority, while others side with Powell's interpretation of the law.

Regardless of the differing opinions, the independence of the Federal Reserve is a cornerstone of its effectiveness and credibility. Any changes to the current interpretation of the law would have significant implications for the future of American economic policy. As things stand, it remains unclear whether President Trump or any future President could alter the status quo.

The question of whether a U.S. President can fire the Federal Reserve Chair is more than a legal debate; it's a question of the balance of power, the independence of the Federal Reserve, and the potential impact on the U.S. economy. It's a question that, for now, remains unanswered.

Source: https://www.bloomberg.com/news/articles/2025-03-21/jerome-powell-says-trump-can-t-fire-him-that-might-change