Can Trump fire Federal Reserve chair Jerome Powell?
Donald Trump told Republican lawmakers that he plans to fire the US Federal Reserve chair, Jerome Powell, in what would be an unprecedented move against the non-partisan central bank,Trump drafted a letter firing Powell and showed it to House Republicans during a private meeting on Tuesday night, according to the New York Times,Stock markets sank on the news but rose as Trump complicated the story by telling reporters it was “highly unlikely” he would fire Powell,This isn’t the first time Trump has said he will fire Powell, whose term is up in May 2026, though it marks a rapid escalation of his threats to do so,Any move by the White House to formally dismiss the Fed chair would be unprecedented.
The president has historically respected the independence of the central bank, and kept out of its way – even if there was disagreement over policy,But, of course, it looks like Trump is following his own playbook,Here’s what we know is going on between Trump and the Federal Reserve,As the central bank, the Fed manages the money supply in the US, primarily by setting the interest rate,The interest rate affects how much it costs to borrow money for things like mortgages or other loans.
When setting the interest rate, the Fed considers inflation and the labor market, what it calls its “dual mandate”: higher interest rates could bring down inflation, but negatively affect the labor market, while lower interest rates could do the opposite.Over the last few years, starting before Trump’s second term, the central bank has been trying to bring down inflation, which peaked at 9% in June 2022.To do that, the Fed raised interest rates to a multi-decade high of between 5.25% and 5.5%.
Just a few years before, at the height of the pandemic, in 2020 and 2021, interest rates had been close to zero.Late last year, the Fed lowered interest rates, which are now 4.25% to 4.5% – a whole point lower than where they were a year ago.US stock markets are very sensitive to Fed decisions.
Stocks started to climb after September, when the Fed started cutting rates.Trump’s tariffs have put the economy in a tailspin.Stock markets were quick to respond to – and recover from – the enormous levies.Fed officials have had four meetings this year in January, March, May and June during which they could have changed interest rates.At all four, they declined to touch the rates, citing economic uncertainty.
The pause has made Trump furious.Last month, Trump told Powell in a handwritten note he was “too late” and demanded that the Fed lower rates.“You have cost the USA a fortune and continue to do so,” he wrote.“You should lower the rate – by a lot!”From Trump’s perspective, cutting rates could offset the impact that his tariffs are having on the US stock market.But for Fed officials, it would risk exacerbating inflation.
In a rare public response, Powell directly pointed to Trump’s tariffs as the reason why the Fed has not been able to lower interest rates.“We went on hold when we saw the size of the tariffs,” Powell said earlier this month.“Essentially all inflation forecasts for the United States went up materially as a consequence of the tariffs.”Recent inflation data showed that inflation ticked up in June.The annualized inflation rate went from 2.
4% in May to 2.7% in June – the highest one-month leap since March 2024.Sign up to This Week in TrumplandA deep dive into the policies, controversies and oddities surrounding the Trump administrationafter newsletter promotionThis doesn’t bode well for the possibility of any interest rate cuts at the Fed’s next board meeting at the end of July.The supreme court recently suggested that the president cannot fire the Fed chair, which would make it impossible for Trump to fire Powell, should he try to do so.While the court greenlit Trump’s firing of two officials serving on US labor boards, the court went out of its way to say the Fed has special constitutional protections.
“The Federal Reserve is uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States,” the court wrote in the May decision,But the Trump administration is trying to find a legal workaround,Trump has recently started accusing Powell of potentially lying to Congress about renovations that took place at the Fed’s headquarters in Washington,“I didn’t see him as a guy that needed a palace to live in,” Trump told reporters,“The one thing I would have never guessed is that he would be spending two and a half billion dollars to build a little extension on to the Fed.
”When asked whether he saw it as a fireable offense, Trump said: “I think it sort of is,”Powell has asked an inspector general to review the costs of the renovations, which were originally slated to cost $1,9bn but rose to $2,5bn due to “unforeseen conditions”, according to the Fed’s website,The Fed, which holds huge power over the economy, has to be extremely careful about each decision it makes.
Moves made by the central bank can affect the stock market, the value of the US dollar and government bonds – which all, in turn, affect the US economy.On the Fed’s independence, Powell said that officials “will only make our decisions based on our best thinking, based on our best analysis of the data and what is the way to achieve our dual mandate goals as we can to best serve the American people”.“We will do what we do strictly without consideration of political or any other extraneous factors,” he said.
White House seeks inspection of Fed building as Trump piles pressure on Powell
The White House is pushing for an inspection of the US Federal Reserve headquarters in Washington after Donald Trump suggested the central bank had mismanaged funds for building renovations.The scrutiny comes as Trump has unsuccessfully tried to pressure the Fed chair, Jerome Powell, to quit and demanded he and other officials lower interest rates. Powell has said that lowering rates prematurely could lead to higher inflation, and that Trump’s tariffs had contributed to price increases.In response to the Fed chair’s resistance, Trump has threatened to fire Powell multiple times.Yesterday, after reports that Trump floated the idea of firing Powell to House Republicans, Trump said: “I don’t rule out anything, but I think it’s highly unlikely unless he has to leave for fraud
‘Worse than Covid’: hospitality bosses blame Reeves’ budget for UK downturn
“From a financial point of view, last year’s budget was worse for hospitality than Covid,” says Philip Thorley, who owns 18 pubs across Kent and employs about 400 people.Usually he is looking to recruit staff to help out in the summer months but this year will be different, he says, as the £25bn increase in employers’ national insurance contributions (NICs) that came into force in April has been “catastrophic for our company and industry”.He says the fact that Thorley Taverns is now taxed at about £8,000 a week, totalling more than £400,000 a year, means it cannot afford to take on anybody new during busier months. Current staff will have to work harder, Thorley adds, and the extra pressure could affect customer service levels and opening times.“This affects anybody in retail, in the high street and other entry-level jobs, especially young people,” he says
OpenAI launches personal assistant capable of controlling files and web browsers
Users of ChatGPT will be able to ask an AI agent to find restaurant reservations, go shopping for them and even draw up lists of candidates for job vacancies, as the chatbot gains the powers of a personal assistant from Thursday.ChatGPT agent, launched by Open AI everywhere apart from the EU, not only “thinks” but also acts, the US company said. The agent combines the powers of AI research tools with the ability to take control of web browsers, computer files and software such as spreadsheets and slide decks.It follows the launch of similar “agents” by Google and Anthropic as interest grows in AI models that can handle computer-based tasks by judging which software is best to use and toggling between systems to autonomously complete assignments like drafting travel itineraries or carrying out work research.“The hope is that agents are able to bring some real utility to users – to actually do things for them rather than just outputting polished text and sounding impressive,” said Niamh Burns, senior media analyst at Enders Analysis
UK’s £225m AI supercomputer, Isambard-AI, launches in Bristol
Britain’s new £225m national artificial intelligence supercomputer will be used to spot sick dairy cows in Somerset, improve the detection of skin cancer on brown skin and help create wearable AI assistants that could help riot police anticipate danger.Scientists hope Isambard-AI – named after the 19th-century engineer of groundbreaking bridges and railways, Isambard Kingdom Brunel – will unleash a wave of AI-powered technological, medical and social breakthroughs by allowing academics and public bodies access to the kind of vast computing power previously the preserve of private tech companies.The supercomputer was formally switched on in Bristol on Thursday by the secretary of state for science and technology, Peter Kyle, who said it gave the UK “the raw computational horsepower that will save lives, create jobs, and help us reach net zero-ambitions faster”.The machine is fitted with 5,400 Nvidia “superchips” and sits inside a black metal cage topped with razor wire north of the city. It will consume almost £1m a month of mostly nuclear-powered electricity and will run 100,000 times faster than an average laptop
The Open 2025: first round updates as Fitzpatrick shares lead at Royal Portrush – live
We’ve had 16 rounds in the 60s today. Can Rory make it 17? A birdie would do it and, from an upslope in the lighest of rough, his approach to the last finds the front of the putting surface. A birdie looks unlikely from there – it’s nearly 45 feet away – but you never know with McIlroy. Rory raises his putter and soaks in the adulation as he strides up to the green. Very different emotions to 2019 when he just wanted to get the hell out of there after a 79
Scheffler and Lowry ride out storm while Morikawa gets bogged down again
It was grin-and-bear-it weather during the first morning of the Open, the sort that makes you question why you ever thought a British seaside holiday was a good idea to begin with. The first shower blew in right around the time Scottie Scheffler got to the 1st tee. He had the air of a stubborn parent who had made the mistake of hauling their kids out in the heedless belief that it was going to clear up any minute, and was now determinedly leading them into the local folk museum that had been recommended by the holiday home owners. Scheffler gritted his teeth and got on with it, pretending he was enjoying himself.“Was there a shot that stood out today for you, that you were really pleased with?” Scheffler was asked after his round
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