Bessent Rejects Trump’s Call to Remove Fed Chair Powell Amid Dispute Over Economic Stability, Legal Risks

U.S. Treasury Secretary Scott Bessent has rejected calls from President Donald Trump to remove Federal Reserve Chair Jerome Powell, asserting that the central bank leader remains critical to maintaining economic stability during a period of shifting monetary policy. The disagreement has intensified amid Trump’s repeated criticisms of Powell’s approach to interest rates, which the president argues has constrained job growth and failed to deliver faster price relief for consumers.

Bessent emphasized that Powell’s leadership is essential as the Fed navigates a delicate balance between curbing inflation and supporting economic momentum. Recent economic data, including a projected 2.4% annualized growth rate for the second quarter, has bolstered the Treasury Secretary’s position. This follows a 0.5% contraction in real GDP during the first quarter, driven by increased imports and reduced government spending. Bessent highlighted these trends to counter claims that Powell’s policies are harming the economy, underscoring the risks of destabilizing the Fed’s independence and eroding market confidence.

The potential consequences of replacing Powell before his term expires in May 2026 have become a focal point of the debate. Bessent warned that such a move could trigger legal challenges, create a leadership vacuum, and disrupt financial markets. This comes as the Fed has signaled plans to implement two rate cuts by year-end, a strategy designed to temper inflation while supporting growth. Trump, however, has dismissed these adjustments as politically motivated, accusing Powell of aligning with Democratic priorities during the 2024 election cycle.

Compounding the tensions, the Trump administration’s imposition of broad tariffs has introduced new uncertainties. The Fed has acknowledged these measures could amplify inflationary pressures, with Powell noting that the costs will ultimately be passed to consumers. Bessent aligned with this perspective, arguing that removing Powell would hinder the central bank’s ability to manage inflation and stabilize the economy. Legal experts have further complicated the matter by highlighting that the president lacks unilateral authority to fire the Fed chair, citing the central bank’s quasi-independent structure as affirmed by recent Supreme Court rulings.

Trump has shifted focus to allegations of mismanagement in the Fed’s $2.5 billion building renovation project, accusing Powell of fiscal negligence. The central bank attributes cost overruns to inflation, environmental remediation, and design changes, while an independent review of the project is underway. Despite these claims, Bessent has maintained that the Fed’s core mission of ensuring economic stability should remain its primary priority. The administration’s internal divisions reflect a broader conflict between Trump’s populist economic agenda and the institutional mandate of the central bank.

With Powell’s term still over a year from its scheduled conclusion, the resolution of this standoff hinges on the administration’s ability to navigate political pressures against the economic and legal risks of challenging the Fed’s independence. Bessent’s measured stance underscores the importance of preserving the central bank’s autonomy in managing policy, even as Trump continues to criticize its decisions. The outcome will likely shape the trajectory of U.S. monetary policy and market confidence in the months ahead.