Trump's Plan to Oust Jerome Powell As Head Of The Fed

In a recent explosive statement, Donald Trump did not mince his words regarding Jerome Powell. The American president stated: “His resignation couldn’t come soon enough”, and that he would not hesitate to fire him if he so wished.

The confrontation between Trump and Powell intensifies

Donald Trump stated last Thursday during a meeting in the Oval Office that Jerome Powell “would leave very quickly” if he decided to. This statement comes despite the Fed’s theoretical independence and experts’ doubts about the president’s legal ability to dismiss its chairman over simple political disagreement.

This threat is part of a long series of criticisms made by Trump against Powell, whom he accuses of allowing inflation to rise sharply during and after the pandemic. The president wants to take back control of American monetary policy to align his economic goals with those of the central bank.

Scott Bessent, the new Treasury Secretary, tempered these statements by saying that “ monetary policy is a precious jewel to be preserved “, while confirming that the administration would begin interviewing candidates to succeed Powell as early as next fall.

This announcement suggests that even if Powell is not immediately dismissed, Trump is already actively preparing his replacement before the end of his term in 2026.

Financial markets are watching this situation with concern, as a break with the Fed’s traditional independence could cause significant instability. American monetary policy influences the global economy, and any abrupt change could have international repercussions.

Kevin Warsh, portrait of the potential successor

Kevin Warsh, 55, former vice president at Morgan Stanley and Fed governor from 2006 to 2011, is considered the favorite to succeed Powell. His experience during the Great Recession, where he served as the main intermediary with Wall Street, grants him significant credibility in the financial world.

In an op-ed published in the Wall Street Journal, Warsh criticized the Fed for allowing inflation to rise sharply during the pandemic. He attributes this increase to “a government that spent too much and a central bank that printed too much“, thus aligning his view with Trump’s.

Currently a researcher at the Hoover Institution and Stanford University, Warsh recently advised Trump’s transition team on economic policy. His closeness to the president and critical perspective on the current Fed management make him the ideal candidate for Trump, who is seeking to redirect U.S. monetary policy.

If this transition at the head of the Fed materializes, it will mark a major turning point in American monetary policy and could redefine the balance of power between the White House and the traditionally independent monetary institution.

Meanwhile, Trump is ramping up pressure against Powell and demands a swift response from the Fed to inflation. Could the departure of the central bank’s chairman happen sooner than expected?