Uncertainty swirled across Wall Street Wednesday as conflicting signals emerged from the White House about the future of Federal Reserve Chair Jerome Powell. News reports, citing a senior administration official, stated that President Donald Trump informed Republican lawmakers in a closed-door meeting that he was likely to attempt to remove Powell from office. The news broke at 11:53 a.m., further inflaming anxieties about the central bank’s stability and the administration’s relentless push for lower interest rates.
Just thirty minutes later, President Trump seemed to walk back the threat when pressed by reporters. “We’re not planning on doing anything,” he told the press, though he left the door open, saying, “I don’t rule out anything, but I think it’s highly unlikely. Unless he has to leave for fraud.” Trump has previously floated the idea that Powell or the Fed could be removed for cause, referencing funds the central bank has spent on office building restorations.
This on-again, off-again approach has fueled a wave of uncertainty, compounding concerns over monetary policy and the potential fallout from a sudden change in leadership at the central bank. With the administration making no secret of its desire for lower rates, the prospect of disruption looms large.
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The anxiety is not lost on financial leaders. JPMorgan Chase Chief Executive Jamie Dimon underscored the gravity of the situation after the bank’s earnings call on Tuesday. “I think the independence of the Fed is absolutely critical,” Dimon told The Wall Street Journal. “Playing around with the Fed can have adverse consequences, the absolute opposite of what you might be hoping for.”
President Trump’s criticisms of the central bank and Powell have been a recurring theme for months, as he has repeatedly called for rate cuts. Yet the Fed, designed to be politically independent, must carefully balance its twin mandates of price stability and maximum sustainable employment—goals that sometimes require contradictory monetary actions, often demanding restraint in uncertain times.
The friction between the President and the Fed is far from unprecedented. During the first Trump administration six years ago, he in displeasure noted, “we don’t have a Fed that knows what it’s doing.” Historically, presidents from both parties have pressured the Fed to adopt policies that would stimulate the economy. According to historical accounts, President Lyndon Johnson once physically confronted then-Fed Chair William McChesney Martin Jr. in the 1960s to secure lower interest rates.
Despite the drama, the impact of a shake-up at the Fed may already be priced into the market. “Most deals we’re active in, they’ve priced in the uncertainty of the Fed,” Anthony Delfre, managing director and head of the Real Estate Advisors team at Brown Gibbons Lang & Company, told GlobeSt.com.
Delfre noted that the market turmoil is not solely due to speculation over the Fed’s leadership. “The tariff aspect did shake up the market quite a bit,” he said. “We see banks pulling back again. There are internal credit issues, based on maturities coming, and the overarching uncertainty specific to the Fed and interest rates.”
In Delfre’s view, the role of the Fed Chair, while influential, is ultimately checked by institutional safeguards. “I think the person in the Chair’s position is not in complete control of what the Fed’s policies are,” he explained. “If something is completely illogical, the other Fed governors are going to vote them down. But it’s interesting times for sure.”
Powell's term is scheduled to end as chair of the central bank in May 2026 — but he can still stay on as a governor until 2028. Trump has already stated that he is lining up his list of replacements for Powell.
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