Is Jerome Powell on Borrowed Time as Head of the Fed?

Trump and GOP Allies Turn Up the Heat on Fed Chair Powell as Political Storm Builds

Federal Reserve Chair Jerome Powell is facing a growing storm of criticism from Donald Trump, Republican lawmakers, and regulators, raising uncertainty over whether he’ll complete his term, which runs through May 2026.

The pressure campaign stems from frustration with Powell’s reluctance to cut interest rates, as well as allegations ranging from political bias to misleading Congress over costly renovations at the Fed’s headquarters. With markets already sensitive to macroeconomic signals, any shakeup at the central bank could have far-reaching consequences.

Trump Escalates Long-Running Feud

Trump, who appointed Powell in 2017, has reignited his attacks on the Fed chair, echoing tensions from his first term when he repeatedly criticized Powell for raising interest rates.

In late June, Trump called Powell a “stubborn mule,” blaming him for costing the U.S. “hundreds of billions” through persistently high rates, now set between 4.25% and 4.5%. Days later, the White House released an image of Trump’s handwritten demand for immediate rate cuts, comparing the U.S. unfavorably to nations like China and Japan with lower borrowing costs.

On July 3, Trump took to Truth Social, calling for Powell to resign and tying him to alleged misconduct linked to a $2.5 billion renovation of the Fed’s headquarters—a project approved prior to Powell’s chairmanship in 2018.

Although Trump has publicly denied plans to fire Powell, reports suggest names like Kevin Warsh and Fed Governor Christopher Waller are being floated as possible successors. His advisers have reportedly revisited legal arguments they explored in 2019 when Trump first explored removing Powell.

Housing Official Joins the Critics

Adding to the criticism, Federal Housing Finance Agency Director Bill Pulte has accused Powell of worsening the housing crisis by maintaining high mortgage rates and misleading Congress about the scope of the Fed’s renovation projects.

On July 2, Pulte called for a congressional probe, supported by Senator Cynthia Lummis (R-Wyo.), who voiced concern about rising housing costs fueled by tight monetary policy. Powell has dismissed allegations of extravagant spending, calling reports of luxury facilities “fictional.”

Republican Lawmakers Weigh In

Several Republican lawmakers have joined the chorus.

Sen. Rick Scott (R-Fla.) has blasted Powell’s leadership, citing the Fed’s financial losses and arguing that high rates are holding back economic growth. Sen. Tommy Tuberville (R-Ala.) has repeatedly called for Powell’s ouster.

On July 2, House Judiciary Chair Jim Jordan (R-Ohio) told Bloomberg he’s open to investigating Powell’s performance, though no formal inquiry has been launched.

Treasury Secretary Scott Bessent has warned that removing Powell could unsettle markets but indicated openness to new Fed leadership after Powell’s term expires.

Powell Stands His Ground

Despite the political firestorm, Powell remains protected by federal law, which states that a Fed chair can only be removed “for cause”—a high legal bar reinforced by recent Supreme Court rulings.

Powell has largely brushed off political attacks, insisting the Fed will remain data-driven in setting policy.

At a June 18 press conference, Powell defended the Fed’s decision to keep rates steady amid concerns that Trump’s proposed tariffs could rekindle inflation. While acknowledging inflation has cooled, he warned that tariffs could push prices back toward 3%, complicating the Fed’s efforts to hit its 2% target.

Powell also noted the economy’s resilience, pointing to low unemployment and steady private-sector growth. When questioned about the political attacks, he emphasized the Fed’s independence and its mission to maintain economic stability.

Uncertainty Ahead

Powell’s future appears secure for now, but the pressure campaign has introduced significant political risk. While legal protections shield him from immediate removal, persistent criticism could undermine his influence, potentially relegating him to a weakened role.

Whether Trump ultimately seeks to oust Powell before his term ends—or waits until 2026 to reshape the Fed—the clash over central bank leadership is adding new volatility to an already complex economic backdrop. Investors and markets are watching closely for what happens next.