Powell Considers Resignation Amid Trump Pressure for 1.25% Interest Rate

Federal Reserve Chairman Jerome Powell is reportedly considering resignation amid growing pressure from President Donald Trump. The tension escalated after Trump demanded a 1.25% interest rate and criticized the Fed's decision to spend $2.5 billion on a new headquarters in Washington, D.C. Trump has been vocal about his dissatisfaction with the Fed's policies, accusing the central bank of hindering his economic agenda. The president has repeatedly called for lower interest rates, arguing that they would boost economic growth and job creation. Powell, who was appointed by Trump in 2017, has defended the Fed's independence and its mandate to maintain stable prices and maximum employment. The potential resignation of Powell would mark a significant shift in the Fed's leadership and could have implications for monetary policy. Trump's demand for a 1.25% interest rate reflects his desire for more accommodative monetary policy, which could potentially stimulate economic activity but also risks fueling inflation. The situation highlights the ongoing tension between the White House and the Fed, with Trump seeking to exert more influence over the central bank's decisions. The outcome of this power struggle remains uncertain, but it is clear that the Fed's independence is under threat. The potential resignation of Powell would be a significant development in the ongoing debate over the role of the central bank in the economy.

Senator Tim Scott described the spending as resembling the “Palace of Versailles.” The project, revealed earlier this year, has faced backlash across political lines. Powell addressed the issue in a June Senate hearing, saying that some of the more extravagant descriptions are misleading and inaccurate. The current Fed Funds rate is 4.25%–4.5%. Trump said it should be between 1.25% and 1.5%. Speaking in June, he said he had called Powell “every name in the book” to try and push for lower rates. Peter Schiff, a prominent financial commentator, echoed the sentiment, saying that if Powell steps down, his successor could move quickly to slash rates. Schiff added that such a move could “put the nail in the dollar’s coffin,” driving long-term rates, inflation, and gold prices higher.

William Pulte, head of the Federal Housing Finance Agency and chairman of the Fannie Mae and Freddie Mac boards, released a public statement supporting Powell’s potential resignation. “I’m encouraged by reports that Jerome Powell is considering resigning. I think this will be the right decision for America, and the economy will boom,” he said. When asked for comment, the Federal Reserve referred to Powell’s past statements that he intends to serve out his term, which runs through May 2026. No further comment was given.

The next Federal Open Market Committee meeting is scheduled for July 29–30. The Fed has held rates steady since early 2024 and projects two rate cuts in 2025. Powell has stated the Fed will assess how tariffs and inflation evolve before adjusting policy. A recent Supreme Court ruling has limited the president’s power to remove a Fed chair, which may delay any leadership change if Powell chooses not to resign.