Powell says he won’t step down and Trump can’t make him

WASHINGTON — Federal Reserve Chair Jerome Powell said he and other officials at the central bank cannot be ousted or demoted by the president without cause.

During his post-Federal Open Market Committee press conference, Powell had a concise response when asked whether he would bow to pressure from the incoming administration to resign: “No.”

Powell faced a barrage of questions about President-elect Donald Trump’s policy agenda as well as his personal experience with the once and future White House resident. Powell largely declined to weigh in on anything related to this week’s presidential election or its potential implications for monetary policy.

The Fed chair did not hesitate, however, when asked whether the president could remove or demote — from chair or vice chair to a standard board seat — a member of the Federal Reserve Board of Governors at will.

“Not permitted under the law,” Powell said flatly. 

Powell’s comment came amid reports that Trump’s transition team would like to shake up the Fed’s governing body by elevating or appointing board members more aligned with the president’s policy preferences. This includes Powell and Vice Chair for Supervision Michael Barr, the Fed’s top regulatory policymaker.

According to the Banking Act of 1935, Fed governors can only be removed for cause, meaning inefficiency, neglect of duty or malfeasance — a key safeguard to the Fed’s political independence. But, the statute makes no such mention for removal of chair or vice chair designations, nor does the Dodd-Frank Act of 2010, which created the vice chair for supervision position. 

This ambiguity leaves the door open for Trump to attempt to strip Powell and Barr of their titles, but could also lead to a high-stakes legal battle between the White House and the central bank.

 
Powell’s chairmanship expires in 2026, as does Barr’s term as vice chair. Both officials would be eligible to remain on the board after their executive positions lapse, with Powell’s underlying seat expiring in 2028 and Barr’s in 2032. 

In the near term, Powell said this week’s presidential outcome will have “no effect” on the Fed’s policies. 

While there are some concerns among policy and economic analysts about the monetary policy implications of Trump’s proposals for universal tariffs and lower taxes, Powell said it is too soon to know what those might look like in practice.

“We don’t know what the timing and substance of any policy changes will be,” Powell said. “We therefore don’t know what the effects might be on the economy, specifically, whether and to what extent those policies would matter for the achievement of our goals of maximum employment and price stability. We don’t guess. We don’t speculate.”

During today’s meeting, the FOMC lowered its benchmark interest rate by a quarter percentage point. This was the second consecutive meeting in which the committee eased its monetary policy stance, following the group’s half-point cut in September.

Moving forward, Powell said the FOMC will move “carefully” as it pursues a neutral rate — one that neither stimulates nor suppresses demand. In doing so, he said, the committee will be careful not to move so slowly as to hurt the job market nor so quickly that inflation is able to flare up again.

“We’re trying to steer between the risk of moving too quickly and perhaps undermining our progress on inflation, or moving too slowly and allowing the labor market to weaken too much,” Powell said. “We’re trying to be on the middle path where we can maintain the strength in the labor market while also enabling further progress on inflation. We think that’s where we are, but that’s the question we’re going to be asking in [December] and in other meetings.”

The FOMC’s next and final meeting in 2024 will be on Dec. 17 and 18.