Federal Reserve Chair Powell Agrees to Step Down After Trump Pressure

Jerome Powell, the current chair of the Federal Reserve, has agreed to step down following sustained pressure from President Trump and his inner circle. The announcement was made by Billy Pulte, the head of the U.S. Federal Housing Finance Agency, in a statement released on Friday evening. The news came after a prolonged period of tension between Powell and Trump, which had been building for at least a year.

On June 9, President Trump demanded an immediate 300 basis point interest rate cut, a move that economists widely considered economically senseless. Trump's demand was based on a flawed calculation that included all federal debt, not just the portion held by the public, which is the relevant figure for calculating interest savings. Experts pointed out that only around 20% of the $29 trillion debt could be refinanced within a year, resulting in $174 billion in realistic first-year savings. Over five years, the interest savings could potentially reach $2.5 trillion, but Trump's focus seemed to be more on undermining Powell than on the logistics of the rate cut.

Trump's public attacks on Powell intensified, with the President criticizing the Fed chair for not lowering interest rates by 3 points. Trump argued that Powell's policies were costing the country a lot of money and preventing the U.S. from leading the global economy. Despite Powell's explanations during a Senate appearance in June, where he clarified that many of the reports about the renovation of the Fed's main building were false or exaggerated, the attacks continued. Powell denied the existence of a VIP dining room, new marble, water features, beehives, and roof terrace gardens, stating that the renovations were necessary to replace damaged slabs and maintain the building's integrity.

The legal constraints on removing the Fed chair without cause, as ruled by the Supreme Court in May, led Trump's team to resort to personal pressure and public attacks. The White House targeted the $2.5 billion renovation of the Fed's main building, the Marriner S. Eccles Building, approved by the National Capital Planning Commission in 2021. Trump's budget chief, Russell Vought, raised legal concerns about the renovation and compared it to the Palace of Versailles, describing it as "horrifying from a cost perspective." Despite Powell's efforts to clarify the situation, the public smear campaign continued, with Trump's allies floating replacement names behind the scenes. The relentless pressure ultimately led Powell to agree to step down, marking the end of a contentious chapter in the relationship between the White House and the Federal Reserve.