Powell Under Siege as Trump Allies and Fed Critics Push for Change

Jerome Powell’s cautious approach to interest rates has ignited fierce backlash, triggering speculation about his future as Federal Reserve Chair amid the most intense political storm of his tenure.

Powell, whose term runs through May 2026, is facing a broad coalition of critics, including President Donald Trump, Federal Housing Finance Agency (FHFA) Director Bill Pulte, White House Press Secretary Karoline Leavitt, key lawmakers, and Treasury Secretary Scott Bessent. They accuse him of policy missteps, political bias, and even deceptive conduct.

The crypto world, closely following Fed leadership given its impact on risk assets, watches the unfolding drama with uncertainty about the implications for monetary policy and financial markets.

Trump reignites an old feud

Trump, who first nominated Powell in 2017, has renewed a conflict that simmered during his first term. Back then, Trump slammed Powell’s rate hikes as damaging to growth and publicly floated firing him in 2019.

Since his November 2024 re-election, Trump has escalated the attacks. On June 27, he called Powell a “stubborn mule,” blaming him for “hundreds of billions” in losses due to high rates stuck at 4.25%–4.5%. A handwritten note, shared by Leavitt on June 30, demanded immediate rate cuts, citing lower rates in Japan and China as justification.

The Federal Reserve, however, is an independent institution. While the President nominates its governors, they require Senate confirmation, and decisions are made by majority vote of the Board—not solely by the chair.

On July 3, Trump demanded Powell’s resignation via Truth Social, accusing him of misconduct tied to the Fed’s $2.5 billion headquarters renovation—a project initiated before Powell took the helm in 2018. Though Trump has sometimes denied intent to fire Powell, his mentions of potential replacements like Kevin Warsh and Christopher Waller suggest he’s preparing to reshape the Fed’s leadership.

Trump’s attacks echo his first term, when he labeled Powell a bigger “enemy” than China’s Xi Jinping over policies he claimed slowed the economy. Following his 2024 victory, advisers like Kevin Hassett revisited ways to remove Powell, who has refused to resign.

Housing market in the crosshairs

FHFA Director Bill Pulte has taken aim at Powell’s high-rate policies, warning they threaten the housing market’s stability.

On July 2, Pulte demanded a congressional probe, claiming Powell misled lawmakers during a June 25 Senate hearing about the Fed’s headquarters renovation, including details like a VIP dining room. Backed by Senator Cynthia Lummis (R-Wyo.), Pulte has accused Powell of political bias and exaggerating tariff-driven inflation risks, blaming him for worsening housing affordability with mortgage rates stuck between 6.6% and 7%. Powell, meanwhile, has dismissed claims of “luxury” renovations as inaccurate.

Republican push intensifies

Republican senators like Rick Scott and Tommy Tuberville have joined the anti-Powell chorus, arguing the Fed chair’s policies have harmed taxpayers and the broader economy.

On April 28, Scott accused Powell of overseeing an “unaccountable Fed” that lost over $2 trillion and sought lavish spending on its headquarters. On June 17, he blasted Powell’s leadership as detrimental to growth while Fed staff salaries outpaced those of the broader public. Tuberville, meanwhile, has repeatedly called for Powell’s removal, including a fresh demand on June 24.

On July 2, House Judiciary Chair Jim Jordan (R-Ohio) signaled openness to investigating Powell’s leadership, following Pulte’s calls for congressional oversight. Speaking to Bloomberg, Jordan emphasized that while no formal investigation was yet planned, “everything is on the table” when it comes to the committee’s constitutional oversight responsibilities.

Treasury Secretary Scott Bessent—himself considered a possible Powell successor—has warned that attempts to forcibly remove Powell could trigger market turmoil, citing April’s 15% market slide linked to Trump’s tariffs. Still, Bessent supports rate cuts and hinted at installing new Fed leadership once Powell’s term ends.

Powell remains defiant

Despite the political onslaught, Powell’s position is protected by law. The Federal Reserve Act permits removal only “for cause,” such as proven misconduct, a principle recently upheld by the Supreme Court to protect Fed independence.

Powell has consistently brushed aside political interference, calling it “noise,” and has reiterated the Fed’s commitment to data-driven decisions. Rates remain at 4.25%–4.5% as the Fed attempts to balance fighting inflation and sustaining economic growth. Powell cites Trump’s tariffs as potential inflationary risks that could push Personal Consumption Expenditures inflation to 3% in 2025, complicating the path to the Fed’s 2% target.

At his June 18 press conference, Powell defended holding rates steady, arguing tariff-driven price pressures required more economic data over the summer. He underscored the economy’s resilience, with unemployment at 4.2% and private domestic growth at 2.5%, but cautioned that persistent inflation could strain the Fed’s dual mandate.

He emphasized the importance of keeping long-term inflation expectations anchored at 2% to avoid entrenched price increases. When pressed about political attacks, Powell remained focused on delivering a “good, solid American economy.”

While critics have yet to produce evidence that would justify removal, talk of a potential “shadow chair” working behind the scenes could undermine Powell’s authority, risking a lame-duck scenario.

Powell’s uncertain road ahead

The convergence of Trump’s rhetoric, Pulte’s housing critique, congressional scrutiny, and Bessent’s succession discussions has put Powell in a precarious position. Legal safeguards may keep him in the chair for now, but political realities could limit his influence and render him a lame duck heading into 2026.

Whether Powell can navigate these turbulent waters and preserve the Fed’s independence remains to be seen. His days may not be immediately numbered—but they are anything but secure.