Trump privately signals he'll fire Fed Chair Jerome Powell — but downplays it in public

Over the span of a day, President Donald Trump veered between firing Federal Reserve Chair Jerome Powell and letting him finish his term leading the central bank.

The president on Tuesday evening suggested to a group of Republican lawmakers that he will fire Powell, according to a senior White House official. He asked the group of conservatives whether he should oust Powell, and they endorsed the idea, according to the official, who was granted anonymity to share details of private conversations.

Such a move would be an extraordinary escalation in Trump's campaign against the Fed for holding interest rates steady and would erode confidence in the central bank's ability to keep a lid on inflation. Earlier this year, the Supreme Court had ruled that the Fed was shielded from the president's mass firings throughout the federal government due to its status as an independent institution. Presidents can't fire Fed officials without cause, and there's been no attempt to do so in recent decades.

But Trump has harangued Powell throughout the summer for not lowering the cost of borrowing to boost a U.S. economy facing headwinds from his own trade war. Trump and his allies have recently turned their focus to criticizing Powell over the the $2.5 billion cost of upgrading the Fed's century-old headquarters in Washington, a figure that has exceeded original projections.

Trump is known for teasing ideas in public or private only to back off them later. And his latest musing to lawmakers about firing Powell came as his administration is grappling with festering anger among Trump's base for its handling of case files related to Jeffrey Epstein, the disgraced late sex trafficker.

Speaking to reporters in the Oval Office on Wednesday, the president acknowledged floating the "concept" of ousting Powell during the meeting with Republican lawmakers. But he also sought to downplay that option by saying he would let Powell serve out the remaining nine months of his term as Fed chair.

"We're not planning on doing anything. We're very concerned," Trump said. "Fortunately, we get to make a change... we'll pick somebody that's good."

Still, he didn't fully close the door on the possibility of removing Powell either. "I don't rule out anything. But I think it's highly unlikely."

A Federal Reserve spokesperson declined to comment. Powell has maintained he will serve out the rest of his term as Fed chief. Powell recently requested the new Fed inspector general Michael Horowitz to review the project.

White House adviser James Blair posted on social media he's attempting to arrange a visit in the near future to the Fed's renovation site alongside Office of Management and Budget Director Russ Vought and several Republican senators. Bill Pulte, the head of the federal agency overseeing Fannie Mae and Freddie Mac, said he'd go as well. Pulte is among the Trump allies attempting to pressure Powell to step aside.

Starting Tuesday evening, one prominent conservative speculated on social media that Trump was about to make a move against Powell. "Jerome Powell is going to be fired. Firing is imminent," Rep. Anna Paulina Luna of Florida, who met with Trump, wrote on X. She was among the 11 Republican lawmakers visiting Trump in the Oval Office that day to resolve a House GOP standoff over crypto legislation.

“Jerome Powell will get fired if he does not lower interest rates. That is not speculation," Luna said in a Wednesday statement provided to Quartz. "The ball’s in your court, Jerome.”

Some Republicans sounded the alarm against firing Powell and warned it would rock financial markets.

"The consequence of firing a Fed chair just because political people don't agree with that economic decision will be to undermine the credibility of the United States going forward," retiring Sen. Thom Tillis of North Carolina said in a floor speech.

Another retiring GOP lawmaker offered gentler criticism. “I think it’s good to keep the Fed independent," said Rep. Don Bacon of Nebraska, adding that it's "best" to keep the central bank apart from the executive and legislative branches.

U.S. stock indexes tumbled upon news of the development, which was first reported by CBS News. But they recovered after Trump took a softer tone in public. The Dow Jones Industrial Average plunged over 300 points in the morning, but rebounded in the afternoon to finish 0.5% higher on the day. It was a similar case for the S&P 500, which ultimately climbed 0.3% to conclude Wednesday's volatile trading session.

The possibility of Powell's firing raised concern among past Fed officials. "If Trump tried to fire Powell, we would end up in court," said William English, a former top Federal Reserve official and now a finance professor at Yale University.

English added that removing Powell may not give Trump the outcome he seeks either. The Fed chair is one of 12 members of the Federal Open Market Committee that sets interest rates and a majority vote is needed to adjust them. Interest rates have not changed for four meetings in a row, and analysts aren't expecting a rate cut until later in the year.

"Even if Powell were pushed out and replaced with a Trump candidate, that wouldn't necessarily mean a big shift in monetary policy," English said. "The new Chair would still have to get the votes."