Let’s talk about a political drama that’s been going on for years: Why does Donald Trump keep threatening to fire the head of the Federal Reserve, Jerome Powell, but never actually does it?
Think of it like a boss who’s really angry at his company’s top accountant. The boss loudly complains that the accountant is hurting the business by not doing what he wants. But every time he goes to fire him, his lawyers and advisers stop him and say, “It’s not that simple, and it will blow up the whole company.” That’s the basic situation here.
The Big Fight: Interest Rates
To understand this, you need to know what they’re fighting about. It mostly comes down to interest rates.
Imagine the Federal Reserve (or “the Fed”) as the manager of the country’s economy’s gas pedal and brakes. When the economy is slowing down, the Fed lowers interest rates (pushes the gas) to make it cheaper for people and businesses to borrow money, spend, and invest. When the economy is overheating and prices are rising too fast (that’s inflation), the Fed raises interest rates (hits the brakes) to cool things down.
For years, Trump wanted the cheapest gas possible. He wanted Jerome Powell to cut interest rates deeply and quickly. He believed super-low rates would keep the economy booming, the stock market rising, and make it cheaper for the government to pay its debts.
But Powell had a different job. After inflation shot up, his main focus became hitting the brakes to bring prices back under control. He raised rates sharply and has been very cautious about cutting them too soon, worried inflation might flare back up. This cautious “wait-and-see” approach has driven Trump crazy, leading to his public anger and firing threats.
The Three Giant Roadblocks Stopping Trump
So why all talk and no action? There are three huge walls standing in the way.
1. The "You Can't Just Do That" Law
This is the biggest wall. The Federal Reserve is designed to be independent from politics for a very good reason. If every new president could fire the Fed chair for not doing what they want, interest rates would yo-yo with every election, creating chaos.
Because of this, the law says a Fed chair can only be removed “for cause.” This is a legal term that means for a serious reason like a crime, corruption, or failing to do the job at all. It does not mean “because the President disagrees with your decisions.” Disagreeing on interest rates is literally part of the Fed chair’s job description. Trying to fire Powell for that would immediately be challenged in court and Trump would very likely lose, creating a huge embarrassment.
2. The "You'll Wreck the Economy" Problem
Even if Trump tried, the immediate reaction would be panic. Economists and bankers everywhere agree that firing a Fed chair over a political fight would be a five-alarm fire for the markets.
Think about what would happen:
The stock market would probably crash because investors hate uncertainty, and this would be the ultimate uncertainty.
The U.S. dollar could lose its value internationally because the world trusts the Fed to be stable and independent.
Interest rates for everyone might actually go up, not down. Why? Because lenders would get nervous and demand a higher return for the new risk that politics is running the show. This is the exact opposite of what Trump wants.
In short, firing Powell to get lower rates could easily trigger a crisis that makes borrowing more expensive for everyone, including the U.S. government.
3. The "It Won't Even Work" Reality
Let’s say Trump magically got past the first two walls. There’s a final, practical problem: Jerome Powell is just one vote.
Interest rates aren’t set by one man. They are set by a committee of people from across the Fed system. Firing the chair doesn’t change the minds of the rest of the committee. They could easily keep rates right where they are. All Trump would have done is caused a constitutional crisis and a market crash for no actual gain.
Plus, the process would take so long in the courts that Powell’s term would probably be over by the time it was settled.
So Why All the Loud Threats?
If he can’t do it, why does he keep talking about it? The threats themselves are a tool.
By publicly bullying and criticizing Powell, Trump hopes to pressure him psychologically. The idea is to make Powell think, “If I don’t at least consider cutting rates, I’m going to be in this political storm every day.” It’s an attempt to sway the Fed’s decisions through public pressure and intimidation, even if the legal removal isn’t possible.
It’s also red meat for his political base. Blaming a “stubborn” Fed chair for not getting perfect economic conditions is a simple story to tell.
The Bottom Line:
Donald Trump hasn’t fired Jerome Powell because the real-world consequences would be a terrible deal for him. He’d face a humiliating court loss, likely trigger a financial panic, and wouldn’t even get the low interest rates he wants. The threats are a loud, noisy attempt to get his way without actually touching the third rail of Fed independence. The system, so far, is holding.
Disclaimer:
This narrative is solely intended for educational reasons. The opinions and suggestions are not those of Mint, Before making any financial decisions, we suggest investors to speak with qualified specialists. ( THIS POST IS FOR EDUCATIONAL PURPOSE ONLY)