US Central Bank Chief Says Trump Cannot Fire Him

The head of the US central bank, Jerome Powell, has pushed back against speculation that his position could be at risk when Donald Trump returns to the White House. Responding to reporters’ questions after the Federal Reserve announced a reduction in borrowing costs, Powell made it clear that he would not step down if asked by Trump, emphasizing that the law prohibits the president from firing him.

Powell’s remarks came after the Fed lowered its key lending rate to the range of 4.5% to 4.75%. The move was widely expected, as forecasters anticipate further reductions in borrowing costs. However, many warned that Trump’s policies on tax cuts, immigration, and tariffs could exert pressure on inflation and complicate the outlook for the economy.

Trump has pledged to impose import duties of at least 10% on all foreign goods entering the US, which economists say would raise prices for consumers. His proposed tax cuts could also fuel inflation by encouraging more spending, while his mass deportation plan could create labor shortages, pushing wages higher. As a result, interest rates on US debt have already risen, reflecting growing concerns about the economic impact of Trump’s agenda.

In response, Powell said it was too early to determine how the new administration’s policies would affect the economy or influence the Fed’s decisions. “It’s still early—we don’t know the specifics of what the policies will be or when they will be implemented,” Powell said. “In the near term, the election will have no effect on our policy decisions.”

Appointed by Trump in 2017, Powell had become a frequent target of the former president’s criticism. During his first term, Trump called Federal Reserve officials “boneheads” and even discussed the possibility of firing Powell. This year, media reports indicated that Trump allies had explored ways to exert greater control over the Fed, including potentially naming a replacement for Powell before his term ends in 2026.

Trump has repeatedly asserted that he has the right to publicly comment on the Fed’s actions but told Bloomberg earlier this year that he would allow Powell to finish his term “especially if I thought he was doing the right thing.”

Powell, however, made it clear Thursday that he would not resign if asked by Trump, adding that it is “not permitted under law” for the White House to remove him. Powell has faced intense scrutiny, especially since inflation surged in 2022. In response, the Fed raised interest rates rapidly, pushing them from near zero to around 5.3% by July—marking the highest level in over two decades. This led to higher borrowing costs for consumers, including for mortgages, credit cards, and loans, contributing to discontent over rising living costs.

In September, the Fed reversed course, cutting rates by 0.5 percentage points, citing stabilizing price increases. Inflation, which stood at over 9% in mid-2022, had dropped to 2.4% by September of this year, according to official figures. The latest rate cut, announced Thursday, was the second in a row and lowered rates by an additional 0.25 percentage points.

While the Fed remains focused on stabilizing prices and maintaining a healthy job market, Powell acknowledged uncertainties about the future. Despite concerns about rising unemployment earlier this year, the latest data showed a strong hiring burst in September. However, job growth stagnated in October, largely due to hurricanes and strike actions.

Powell hinted that further rate cuts are expected, though he refrained from providing specific guidance. “It’s not a good time to offer a lot of further guidance—there’s a fair amount of uncertainty,” he said. “Our goal is to find the right pace and destination as we move forward.”

Goldman Sachs Asset Management’s Whitney Watson expects another rate cut in December, but noted that stronger economic data and uncertainty around fiscal and trade policies could lead the Fed to slow the pace of cuts next year.

“The risks are rising that the Fed may pause or skip rate cuts in 2024,” Watson said, referencing potential concerns about Trump’s fiscal and trade policies.

The Fed’s actions came on the same day the Bank of England warned that borrowing costs might not fall as quickly as expected, citing inflationary pressures from last week’s Budget announcement.

“In both the US and the UK, expectations for future rate cuts have been significantly scaled back compared to earlier predictions,” said Lindsay James, investment strategist at Quilter Investors. “In the US, interest rates are likely to remain higher for longer, as the Fed will need to carefully assess the full impact of Trump’s policies.”