White House Economic Adviser Discusses Fed Chair Jerome Powell’s Job Security

By Andrea Shalal

WASHINGTON (Reuters) – White House economic adviser Kevin Hassett stated on Friday that President Donald Trump and his team are still considering whether they could fire Federal Reserve Chair Jerome Powell. This discussion highlights the significant implications for the independence of the central bank and for global markets.

Hassett remarked at the White House when a reporter asked, “is firing Jay Powell an option in a way that it wasn’t before?” He confirmed that the president’s team will continue to explore this matter.

This statement followed Trump’s recent tensions with Powell, accusing him of engaging in politics by not lowering interest rates and claiming he could dismiss Powell quickly. Trump emphasized, “If we had a Fed chairman that understood what he was doing, interest rates would be coming down. He should bring them down.”

Hassett distanced himself from a prior argument he made in 2021, suggesting that firing Powell would harm the Fed’s reputation for independence and credibility. He indicated that new legal analyses might warrant reconsidering previous positions, particularly in light of a pending Supreme Court case related to Trump’s authority to dismiss federal officials.

Powell has asserted that he cannot be legally removed and intends to complete his term through May 2026. Initially appointed by Barack Obama and later elevated by Trump, Powell fell out of favor with the president due to interest rate hikes and tariffs that could affect inflation and economic growth.

Trump criticized Powell again for failing to lower rates, stating, “The Fed really owes it to the American people to get interest rates down. I am not happy with him.”

After a series of rate cuts last year, the Fed has maintained its policy rate between 4.25% to 4.50% since December. Powell suggested a cautious approach due to uncertainties regarding Trump’s tariffs and their impact on the economy.

Hassett emphasized focusing on the Fed’s policy actions rather than individual officials, also noting that Trump’s policies were fostering capital spending and job growth while reducing inflation.

Economists and investors are closely monitoring the situation. The Fed’s credibility greatly relies on its independence from political pressures, and any move to unseat Powell could provoke market volatility amid concerns about tariffs impacting the economy.

As Evercore ISI Vice Chair Krishna Guha noted, “A sudden crystallization of the threat to Fed independence would both intensify market stress and shift it in a stagflationary direction.”