A Republican member of the Senate committee responsible for overseeing the Federal Reserve has criticized Donald Trump for his attacks on Jay Powell, asserting that no president has the power to dismiss the head of the U.S. central bank. John Kennedy, a Republican from Louisiana who serves on the Senate banking committee, stated on NBC that he believes no president holds the authority to remove the Federal Reserve chairman, emphasizing the necessity of the Federal Reserve’s independence.
This statement followed Trump’s indication that he possesses the authority to remove Powell, expressing to reporters in the Oval Office that if he desired Powell’s removal, it would occur swiftly. The relationship between the U.S. president and the central bank chair he nominated has become increasingly tense, primarily due to the Fed’s hesitation to cut interest rates since Trump returned to the White House in January.
Federal Reserve officials, including Powell, have expressed concerns that Trump’s tariffs may hinder growth and increase prices, placing the Fed in a challenging position wherein defending its commitment to combat inflation becomes critical. Powell, who is committed to serving until the end of his term in May 2026, sparked this tension by describing the Fed’s situation as a “challenging scenario.” In response, Trump voiced his dissatisfaction on Truth Social, suggesting that Powell’s termination should occur promptly.
Kennedy defended the Fed’s focus on controlling inflation, praising Powell’s determination to act appropriately and avoiding being remembered as a Fed chair who allowed unchecked inflation. Inflation, as measured by personal consumption expenditures, reached its highest since the early 1980s in 2022 and remains above the central bank’s target at 2.5 percent.
Some officials at the central bank believe that tariffs could elevate annual price increases back to five percent later in the year if Trump reinstates levies at the levels announced on April 2. Austan Goolsbee, president of the Chicago Fed, mentioned on CBS that many businesses are engaging in “pre-emptive purchasing” of goods potentially affected by tariffs, which might result in artificially heightened activity prior to a decline in the summer.
Addressing Trump’s criticisms of Powell, Goolsbee highlighted that countries where central bank independence has been compromised experience higher inflation rates, slower growth, and weaker job markets. He expressed his hope that the U.S. would not question monetary independence, as it would undermine the Fed’s credibility.
