Trump’s Bid to Fire Fed Chair Jerome Powell Thwarted As SCOTUS Signals Strong Support For Central Bank Autonomy

Federal Reserve Chair Jerome Powell may have received immunity from any move by President Donald Trump and his administration to fire him following a ruling by the U.S. Supreme Court.

The apex court’s decision came after an application from the Trump administration for stay orders from the District Court of Columbia enjoining the president’s removal of National Labor Relations Board (NLRB) member Gwynne Wilcox and Merit Systems Protection Board (MSPB) member Cathy Harris.

The decision was adopted by a 6-3 vote, with three liberal judges of the court dissenting. 

While allowing the ouster of the members from the two agencies, the Supreme Court took a different stance regarding the Fed. 

The Supreme Court disagreed with Wilcox and Harris's arguments that the “case necessarily implicates the constitutionality of for-cause removal protections for members of the Federal Reserve’s Board of Governors or other members of the Federal Open Market Committee.”

The apex court sees the Federal Reserve as a “uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States.”

The Supreme Court ruling should provide a shot in the arm for Powell and his fellow officials at the central bank. 

President Trump has been at odds with Powell over the central bank’s decision not to lower the Fed funds futures rate despite the slowing inflationary pressure and the macroeconomic uncertainties set in motion by the reciprocal tariffs announced in early April.

As recently as last week, the president repeated his call for rate cuts, calling the central bank chief “a man legendary for being ‘Too late’.”

In mid-April, Trump said on his Truth Social account that “Powell’s termination cannot come fast enough,” pointing to slowing inflation and rate cuts by other major global central banks. 

With the markets reacting negatively to Trump's criticism of Powell, the president and his administration have toned down their rhetoric.

The Fed maintained interest rates unchanged at the rate-setting meeting held earlier this month, preferring to stick to its “data-dependent” stance. Powell ruled out a preemptive move at the press conference that followed the meeting. 

"It's not a situation where we can be preemptive, because we actually don't know what the right responses to the data will be until we see more data,” he had said.

Powell was nominated as Fed chair during Trump’s first term, and his term will expire in May 2026.

The Invesco QQQ Trust (QQQ) ETF has gained 0.7% for the year, while the SPDR S&P 500 ETF (SPY) is down 0.2%. 

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