US President Donald Trump is weighing whether to fire Federal Reserve Chair Jerome Powell, according to a Bloomberg report.
The move would likely rattle financial markets and spark a major constitutional and legal battle.
US stocks fell on Wednesday after reports of a possible firing made headlines.
The S&P 500 declined 0.5%, hitting session lows late in the day. The Nasdaq Composite slid 0.6%, while the Dow Jones Industrial Average dropped 200 points, or 0.5%.
A White House official confirmed to the business publication that Trump discussed the potential dismissal in a closed-door meeting with congressional Republicans on Tuesday evening.
While several lawmakers expressed support, the official emphasised that no final decision has been made and the president could change his mind.
The New York Times reported that President Donald Trump had gone as far as drafting a letter to dismiss Powell and even presented it to lawmakers during a recent meeting.
The meeting came shortly after a number of Republican legislators voted against a cryptocurrency bill supported by the administration.
The president reportedly aired his frustration with Powell’s leadership at the Fed, particularly the central bank’s stance on interest rates and recent building renovations.
The reports follow comments made by Rep. Anna Paulina Luna (R-Fla.), who posted on social media that she was “hearing Jerome Powell is getting fired! From a very serious source.”
She followed up by saying, “I’m 99% sure firing is imminent.”
Ongoing frustration over monetary policy
Trump has long been critical of Powell, who was appointed to the Fed’s top post in 2018 during Trump’s first term.
The president’s displeasure has intensified in recent months, especially after the Fed opted to hold interest rates steady amid robust economic growth and persistent inflation concerns.
Trump’s allies have also taken aim at the cost of ongoing renovations at the Fed’s historic headquarters in Washington, DC — a project the president described as “pretty disgraceful” and “exorbitant.”
Speaking to reporters on Tuesday, Trump said, “I think [the renovation] sort of is” a fireable offense, though he stopped short of confirming Powell’s removal.
“I think he’s a total stiff,” Trump added. “But the one thing I didn’t see him as is the guy that needed a palace to live in.”
In response, Powell has defended the project and denied reports of financial mismanagement, recently asking the Federal Reserve’s inspector general to formally review the renovation spending.
Legal and market implications
The potential firing raises serious legal questions about the president’s authority to remove the head of the US central bank.
Powell and other Fed officials have maintained that the law provides limited protections to members of the Board of Governors, including the chair.
“We’re not removable except for cause,” Powell said in April, referencing Section 10 of the Federal Reserve Act, which stipulates that governors can only be removed “for cause.”
Legal scholars interpret that clause as requiring proof of misconduct or neglect, not simple policy disagreement.
Removing Powell without cause could set a precedent with implications for the Fed’s independence, a key principle that underpins the central bank’s ability to set monetary policy free from political interference.
Powell’s current term as Fed chair runs through May 2026.
Any effort to remove him prematurely is likely to face legal challenges and intensify scrutiny of Trump’s broader approach to US economic policy during his second term.
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