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The Federal Reserve has long prided itself on its independence from political pressure. But that tradition is facing renewed strain as President Donald Trump escalates his attacks on Jerome Powell, the central bank’s chair, for refusing to cut interest rates.

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“If I want him out, he’ll be out of there real fast, believe me,” Trump told reporters Thursday in the Oval Office. On his social media platform, Truth Social, the President doubled down: “Powell’s termination cannot come fast enough!” he wrote.

The attacks represent one of Trump’s most pointed efforts yet to undermine the political independence of an institution historically insulated from White House influence to ensure stable economic stewardship. Speaking at the Economic Club of Chicago on Wednesday, Powell pushed back against political interference and said the Fed will base its decisions solely on what’s best for Americans.

“That’s the only thing we’re ever going to do,” Powell said. “We’re never going to be influenced by any political pressure… Our independence is a matter of law.” Powell added that Federal Reserve governors are “not removable except for cause” and that “we serve very long terms, seemingly endless terms.”

Still, that hasn’t stopped Trump from trying to fire the Fed chair. “I don’t think he’s doing the job,” the President said Thursday, claiming that Powell cut interest rates “too late.” Powell was first nominated to lead the Fed by Trump in 2017 and renominated by President Joe Biden in 2022. His current term as chair extends until May 2026.

While Presidents have previously expressed frustration with the Fed for interest-rate decisions that clash with their policy goals, Trump’s rhetoric has raised fresh concerns about political interference in monetary policy, a development that could spook markets and undermine the central bank’s credibility.

“The Fed needs public confidence,” says Sarah Binder, an expert on the Federal Reserve and a senior fellow at the Brookings Institution. “But if the President is trying to get Powell out of his spot, that only adds to the uncertainty that markets won’t be very happy about.”

Here’s what to know about the limits of presidential power over the Federal Reserve, and what’s at stake for the economy.

Can Trump fire Powell?

Legally, the answer is complicated and untested. No Fed chair has ever been removed by a President.

The Federal Reserve Act allows for the dismissal of Board members, including the chair, “for cause.” But that has historically been interpreted as misconduct or incapacity, not policy disagreements. “The court would typically not see disagreements over interest rates settings as ‘for-cause,’” Binder says.

While Trump and his allies have floated the possibility of firing Powell since his first term, they’ve stopped short of doing so, likely because of the uncertain legal terrain and the political blowback it would generate.

Powell himself has also made clear he would not go quietly. Asked in November if he would resign if Trump asked him to, he gave a curt, “No.”

Still, the Trump Administration appears to be laying the groundwork for a potential confrontation. Treasury Secretary Scott Bessent recently told Bloomberg that he expects to begin interviewing possible replacements for Powell in the fall.

Trump’s push to remove Powell comes as the Supreme Court is currently weighing a case involving the President’s power to fire senior officials at independent agencies. While the case involves the National Labor Relations Board and the Merit Systems Protection Board, the implications could ripple wider. If the Court sides with the Trump Administration, it could be interpreted as a signal of how it might resolve a legal clash over Trump’s desire to get rid of Powell, though the Fed has said it doesn’t believe that challenge to be applicable.

At the heart of that debate is a nearly century-old legal precedent: Humphrey’s Executor v. United States, a 1935 Supreme Court ruling that limited the President’s ability to remove leaders of independent agencies without cause. The ruling has long shielded Fed chairs from political dismissal, but could soon be tested by a conservative Supreme Court.

The stakes for the economy

Trump has blamed Powell for failing to act aggressively enough to support economic growth, saying the Fed chair is “playing politics” by keeping interest rates steady. But central bankers—and many economists—argue the opposite: that an independent Fed is essential to managing inflation and stewarding the economy, and that caving to political demands could damage the economy and global trust in U.S. institutions.

Powell has maintained that the Fed’s decisions are “based solely on what’s best for all Americans.” During his speech on Wednesday, he warned that Trump’s sweeping tariffs could thrust the U.S. economy into a “challenging scenario,” with higher inflation and slowing growth—conditions that complicate the Fed’s dual mandates of price stability and maximum employment. Trump’s tariffs have increased costs for many imported goods, squeezing household budgets and sowing fears of a policy-induced slowdown as inflation remains above the Fed’s 2% target.

The President, meanwhile, has demanded immediate rate cuts, pointing to the European Central Bank, which cut interest rates Thursday.

The Yale University Budget Lab estimates that the inflationary effects of Trump’s tariffs amount to an effective tax of $4,900 per household. At the same time, longer-term interest rates have spiked, making borrowing more expensive for homebuyers, businesses, and consumers.

Who is Jerome Powell

Powell, 71, is currently serving his second term as chair of the Federal Reserve, the nation’s most powerful economic policymaking body. A Republican and former investment banker, he was first appointed to the Fed’s Board of Governors by President Barack Obama in 2012 and elevated to chair by Trump in 2017. Biden later reappointed him, signaling broad bipartisan trust in his stewardship of the central bank.

During Powell’s tenure, the Fed has confronted a series of economic shocks, from the pandemic-induced recession to the most severe inflation spike in four decades. Under his leadership, the central bank slashed interest rates to near zero in 2020 to stabilize the economy amid COVID-19, then raised them starting in 2022 to curb inflation, which had surged above 9%.

While inflation cooled in March, reaching a six-month low, the path has been uneven, and Powell has faced criticism from both the left and the right over whether the Fed acted too slowly—or too aggressively.

“The level of support for Powell is probably quite diminished from where it was during Trump’s first term, when the economy really was doing very well,” Binder says. “Many people might say the Fed was too late to curtail inflation in ‘22-23, that they made a big policy mistake. The question now is, who’s going to stand up for the Fed?”