President Donald Trump’s contentious relationship with Federal Reserve Chair Jerome Powell has raised an unprecedented question in modern American governance: Can a president fire the head of the U.S. central bank over disagreements about monetary policy? While Trump repeatedly voiced frustration with Powell during his term—particularly over the Fed’s reluctance to cut interest rates—whether he had the actual authority to remove Powell from his position remains legally ambiguous and politically charged. This article breaks down what is known about the limits of presidential power over the Fed, the structure of Powell’s role, and the potential implications of any attempt to remove him.
Federal Reserve’s Structure
To grasp the limits of presidential power over the Fed chair, it’s crucial to understand the structure of the Federal Reserve itself. The Federal Reserve System was established by the Federal Reserve Act of 1913. It consists of three key entities:
The Board of Governors, based in Washington, D.C., whose seven members are nominated by the president and confirmed by the Senate.
The Federal Open Market Committee (FOMC), which sets monetary policy and includes the seven governors, the president of the New York Federal Reserve, and four other rotating presidents of regional Fed banks.
The 12 regional Federal Reserve Banks, which operate semi-independently across the country. Powell, like his predecessors, holds three roles simultaneously:
Member of Board of Governors
Chair of the Board of Governors (a role appointed to a governor for a renewable four-year term)
Chair of the FOMC (selected annually by the FOMC members)
Each of these positions carries different legal protections and potential vulnerabilities.
Legal Grounds
The Federal Reserve Act states that governors on the Board of Governors can be removed “for cause,” which has long been interpreted to mean serious misconduct or incapacity—not mere policy disagreement. While the law clearly outlines that governors serve 14-year terms unless removed for cause, the language surrounding the chair’s four-year term is less explicit. It does not clearly define whether the president can remove the Fed chair from the chairmanship without removing them from the board entirely.
This has led to speculation about a theoretical loophole: Could a president demote the chair to a regular governor without firing them from the board? Some legal scholars argue that because the role of chair is appointed by the president for a fixed term, it could be interpreted that the president can also remove someone from the chairmanship without violating the “for cause” clause.
History
No president has ever attempted to remove a sitting Fed chair, making this an entirely uncharted legal and political territory. The Fed has long enjoyed a tradition of independence from the executive branch, precisely to insulate it from the kinds of political pressures that might come with trying to sway interest rates or monetary policy for short-term political gains.
Though Trump frequently criticized Powell—calling him an enemy and reportedly discussing firing him in private—he ultimately never followed through with removing him. Nevertheless, his threats alone stirred financial markets and sparked debate in legal and economic circles about the limits of presidential power over the central bank.
The Possible Scenarios
If Trump (or any future president) were to attempt removing Powell, there are three distinct angles to consider:
Removing Powell as Chair Only
The most likely route—should a president want to reduce Powell’s power without a full-blown legal battle—would be to remove him as chair but not as a governor. This would leave Powell still on the Board of Governors until 2028, but unable to lead its meetings or serve as the public face of the Fed. In this scenario, the president could nominate a new chair from among the sitting governors. During Trump’s term, potential alternatives included Michelle Bowman or Christopher Waller—both Trump appointees—but neither had publicly signaled strong support for breaching Fed independence.
This would be the most direct and aggressive move—and also the most legally fraught. Because the law states governors can only be removed “for cause,” such an attempt would likely lead to an immediate legal challenge. Powell, a former lawyer and private equity executive, has the means and legal standing to take the case to court. Legal scholars argue this would likely rise quickly to the Supreme Court, where the limits of presidential authority over independent federal agencies would be tested.
Undermining Powell’s Authority
While the president has no direct authority over the FOMC, the committee traditionally chooses the Fed chair as its head. In theory, the other members could elect someone else, though that would require a consensus that appears unlikely. Powell, even without being chair, could technically still serve on the FOMC so long as he remains a governor. Therefore, a change here would require unusual alignment within the committee itself and likely only follow a demotion or removal from the chairmanship.
Challenging Removal
Powell has publicly expressed confidence that he cannot legally be removed from his position simply over policy disputes. He has stated that the Federal Reserve Act protects the independence of its governors and chair, and that any effort to remove him would likely fail legal scrutiny.
Still, if a president did attempt to oust him, Powell would have the resources and legal foundation to mount a significant challenge. While such a case might begin in lower federal courts, it would almost certainly reach the Supreme Court—especially if it set a precedent affecting other independent federal agencies.
Several similar cases were pending during Trump’s presidency, involving his removal of members from agencies like the Consumer Financial Protection Bureau (CFPB) and the Federal Housing Finance Agency (FHFA). In Seila Law v. CFPB (2020), the Supreme Court ruled that the structure of the CFPB—where the director could only be fired “for cause”—was unconstitutional because it overly restricted presidential authority. However, the Fed’s unique structure and broader institutional history could distinguish it in any future litigation.
The Repercussions
Beyond the legal arguments, the political and economic fallout from firing a Fed chair would be substantial. Financial markets value the Federal Reserve’s independence as a cornerstone of U.S. economic stability. Any move by a president to remove the chair over monetary policy disagreement would almost certainly be interpreted as political interference, which could spark investor panic, damage the dollar, and undermine U.S. economic credibility globally.
In addition, such a move would likely backfire politically. Most presidents have avoided even the appearance of pressuring the Fed. Trump’s public battles with Powell were already an outlier in that regard, and removing the chair could deepen the perception of overreach and authoritarianism.
Will It Actually Happen?
While Trump reportedly considered firing Powell and floated Kevin Warsh as a possible replacement, no action was ultimately taken. Warsh, a former Fed governor, even reportedly advised against removing Powell, recommending instead that Trump wait out Powell’s term, which ends in May 2026.
Kevin Hassett, then Trump’s economic adviser and another potential successor, said the issue was being studied internally but was not imminent. Even within Trump’s orbit, there appeared to be a recognition that firing Powell might carry more risk than reward.
A Dangerous
Precedent
The question of whether a president can fire the Fed chair isn’t just a legal technicality—it cuts to the core of the Federal Reserve’s independence, a principle that underpins the trust global markets place in the U.S. economy. While the law is unclear on the specific removability of the Fed chair, the general consensus among legal experts, economists, and policymakers is that firing someone like Jerome Powell over a disagreement about interest rates would set a dangerous precedent.
Even Trump, despite frequent frustrations, stopped short of testing the limits. Whether a future president might take the leap remains a troubling open question. As long as central bank independence remains a pillar of modern economic governance, the issue of firing a Fed chair will likely remain an extraordinary—and largely theoretical—option. But one that now, more than ever, can no longer be dismissed as unthinkable.
