Trump Threatens To Fire Powell Over DOJ Probe
Trump Threatens To Fire Powell as a DOJ inquiry and stalled Warsh confirmation raise succession risk and push traders to reprice confirmation odds.
KEY TAKEAWAYS
- Trump threatened to fire Powell after his chair term expires, escalating a governance standoff.
- A DOJ criminal inquiry has delayed Warsh confirmation and complicated succession prospects.
- FOMC unity behind Powell suggests near-term interest-rate decisions are unlikely to change.
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President Trump threatened on April 15, 2026, to remove Federal Reserve Chair Jerome Powell if he remains on the Fed’s Board of Governors after his chairmanship expires on May 15. The threat intensifies a governance dispute tied to a Justice Department criminal inquiry that has delayed the confirmation of Trump’s nominee to succeed Powell.
Leadership Dispute and Legal Battle
Powell’s term as Fed chair ends May 15, but his separate term as a governor runs through early 2028. He has said he intends to serve as acting chair if a successor is not confirmed, citing longstanding Federal Reserve practice that a sitting chair remains until a replacement is approved. Powell also indicated he could stay longer if the DOJ investigation continues.
The inquiry, led by U.S. Attorney Jeanine Pirro, focuses on Powell’s comments about the Fed’s headquarters renovation. In March, Chief U.S. District Judge James E. Boasberg ruled subpoenas in the case invalid, calling them an illegal attempt to pressure Powell. Trump has said he has refrained from firing Powell but confirmed the investigation will proceed.
The dispute hinges on competing legal views. The Fed relies on decades of internal practice that a chair stays in office until a confirmed successor takes over. The administration cites decades-old, untested legal opinions that the president alone can appoint an interim chair when a nominee is pending Senate confirmation. The White House may try to elevate economist Stephen Miran or another preferred board member temporarily, but legal advisers say removing a governor like Powell without cause would be difficult.
Warsh Confirmation and Market Signals
Trump nominated former Fed official Kevin Warsh to succeed Powell, but the DOJ probe has slowed the confirmation process. Senator Thom Tillis (R-N.C.) has said he will withhold votes on Fed nominees until the investigation ends.
The Federal Open Market Committee (FOMC), which selects its own chair, has already designated Powell as its chair for the year. Analysts say the committee appears united behind Powell and ready to defend his leadership publicly and in court. Because the FOMC controls monetary policy, a change at the board level—even if an interim chair is installed—would be unlikely to immediately affect interest-rate decisions.
Prediction markets price Warsh’s confirmation by the May deadline at about 22 cents, reflecting low odds and light trading volume. Related sub-markets resolving by April 30 show increased bearish sentiment among traders.
The unfolding governance and legal conflict creates uncertainty around Fed leadership, but Powell’s control of monetary policy through the FOMC suggests near-term policy continuity.
