Trump Backs Off Firing Fed Chair Jerome Powell Amid GOP Concerns and Market Jitters

Last Updated Jul - 17 - 2025, 05:41 PM | Source : Fela News

President Trump says he's "highly unlikely" to dismiss Federal Reserve Chair Jerome Powell after previously hinting at it, sparking political debate and market

On Wednesday, July 16, 2025, President Donald Trump said it was “highly unlikely” he would dismiss Federal Reserve Chair Jerome Powell, just a day after suggesting in a private meeting that he was leaning toward doing so. Trump acknowledged that during a Tuesday evening meeting at the White House with around a dozen Republican House members, he floated the “idea” of removing Powell — a frequent target of his criticism for not cutting interest rates as Trump has demanded.

“Almost all of them told me I should,” Trump remarked, referring to the lawmakers who had come to discuss cryptocurrency legislation. A White House official noted that Trump appeared inclined toward the idea during the meeting and even brandished a letter about firing Powell. However, a source familiar with the situation clarified that the letter was a prop drafted by someone else, and Trump himself had not written any official document.

These sources spoke on condition of anonymity as they were not authorised to publicly discuss the private discussions.

Trump later walked back the idea during an Oval Office meeting with Bahrain’s Crown Prince Salman bin Hamad Al Khalifa, saying firing Powell was “highly unlikely” — unless there were grounds such as fraud.

In recent days, the Trump administration has criticised Powell for alleged mismanagement of a \$2.5 billion renovation project at the Federal Reserve, continuing efforts by the president to remove the Fed chief, despite the central bank’s independence.

Markets reacted quickly to Trump’s remarks. The S&P 500, which had posted modest gains earlier in the day, fell by 0.7% following reports that Powell might be fired, though losses eased slightly after Trump’s later statement. Treasury yields also fluctuated but remained relatively stable overall.

Those present at Tuesday’s meeting included members of the far-right House Freedom Caucus, whose views aren’t always aligned with broader Republican sentiment. Senate Republicans, meanwhile, have adopted a more cautious stance. Some have expressed support for Powell, pending an investigation into the Fed’s renovation project.

Senator Thom Tillis (R-NC), who is not seeking reelection, warned that firing Powell would prompt “a pretty immediate response” and argued that turning the Fed into a politically controlled body would be a major mistake. Senator John Kennedy (R-LA) also said Powell had “done a decent job,” even though they had sometimes disagreed. “He calls it like he sees it,” Kennedy noted.

A meeting between Powell and Republicans on the House Financial Services Committee, which had been scheduled for Wednesday evening, was abruptly cancelled due to votes in the House, according to an aide who spoke anonymously.