Will He Resign If Donald Trump Asks? Fed Boss Jerome Powell Responds

Will Powell Resign: Federal Reserve Chair Jerome Powell stated on Thursday that he would not step down early if incoming President Donald Trump attempted to remove him, emphasising that his position is legally protected. 

Powell’s comments followed the Federal Reserve's anticipated decision to cut its target interest rate by a quarter percentage point, adjusting it to a range of 4.5 to 4.75 per cent as the bank moves towards policy normalisation amid easing inflation.

Not permitted under the law to remove me: Jerome Powell

During a press conference after the Federal Open Market Committee’s latest meeting, Powell was asked if he would consider leaving his role if requested by Trump, who had previously criticised him during his first term in office. 

Powell responded firmly, saying "no" and underscoring that neither he nor other Fed governors could be dismissed before their terms expire under current law.

Elections to have no impact on monetary policy: Powell

Ahead of the upcoming US elections on Tuesday, expectations had grown that the Federal Reserve would maintain a path of rate cuts. However, Powell dismissed speculation that election results would impact the Fed's policy trajectory, affirming that the central bank’s decision-making remains independent of political developments. 

“In the near term, the election will not affect our policy decisions,” Powell said. “We don’t guess, speculate, or factor in assumptions about what the broader government might do.”

Governor Kevin Warsh can be Trump’s first choice: Reports

According to media reports cited by Reuters, Trump may consider former Fed Governor Kevin Warsh, a frequent critic of the bank, or former administration chief economist Kevin Hassett as potential successors when Powell’s term concludes in 2026. 

The leadership of the Federal Reserve is legally structured to insulate members from political interference, ensuring they serve full terms unless removed for cause.

Powell was initially appointed Fed Chair by Trump in early 2018, succeeding Janet Yellen, who went on to serve as President Joe Biden's Treasury Secretary. Biden later reappointed Powell, but tensions marked Powell's tenure with Trump, who criticised the central bank’s policy decisions, diverging from the tradition of presidents refraining from direct critiques of the independent Fed.

Analysts suggest that any attempt by Trump to remove Powell or other Fed officials could destabilise financial markets and reignite inflation concerns. Trump's policy inclinations, including high trade tariffs and stringent immigration enforcement, could potentially drive up inflation, reversing the progress made by the Fed in cooling price pressures.

(With Reuters inputs)