Trump Raises Possibility of Firing Fed Chair Powell Amid Renovation Dispute

President Donald Trump has intensified criticism of Federal Reserve Chair Jerome Powell, suggesting he could attempt to remove Powell over a $2.5 billion renovation of the central bank's Washington headquarters and alleged mismanagement. While Trump stated last week that it is "highly unlikely" he would try to fire Powell, he indicated the possibility remains if there is evidence of fraud.

The president's authority to remove a Fed chair is limited. Under Section 10 of the Federal Reserve Act, a member of the Board of Governors can only be removed "for cause," which is generally interpreted as malfeasance, neglect of duty, or inefficiency—not for policy disagreements. Legal scholars note that it is unclear whether this authority extends to removing Powell from his leadership roles as chair of the Board and the Federal Open Market Committee.

Peter Conti-Brown, a monetary policy scholar at the University of Pennsylvania, wrote that the law is ambiguous on whether the president can demote the Board chair to a regular governor, stating, "Other presidents have concluded that they lacked that authority, and there is good reason to think they were right. But we just don’t know: it’s legally uncertain."

If Trump were to issue a removal order, Powell would have the opportunity to respond, though the timeline for such proceedings is unclear. Lev Menand, an associate professor at Columbia Law School, noted, "There hasn’t been a presidential for-cause removal proceeding in a century, so exactly how much time Powell has to be heard is really hard to say."

Should Powell contest his removal, the case could take months and potentially reach the Supreme Court, possibly extending until Powell's term expires in May 2026. During litigation, if courts issue an injunction, Powell would remain as chair; otherwise, Vice Chair Philip Jefferson would assume his duties. Powell would be responsible for his own legal costs, as he would be the plaintiff in any lawsuit.