Trump’s Path to Rate Cuts Likely Requires a Full Fed Board Overhaul, Economists Say

Firing Powell May Not Deliver the Cuts Trump Wants

President Donald Trump’s repeated public jabs at Federal Reserve Chair Jerome Powell have reignited speculation that the White House may seek to oust the central bank chief. But according to a growing number of economists, even a successful attempt to remove Powell wouldn’t be sufficient to steer monetary policy in the president’s preferred direction—namely, toward lower interest rates.

Dual Role, Limited Leverage

Jerome Powell currently holds dual roles as Chair of both the Fed Board of Governors and the Federal Open Market Committee (FOMC), the body responsible for setting interest rates. But experts warn that simply replacing Powell may do little to reshape the direction of U.S. monetary policy unless the entire structure of Fed leadership is revamped.

Paul Ashworth, chief North America economist at Capital Economics, explained that while firing Powell might be politically symbolic, it wouldn’t necessarily translate into policy changes. “In all likelihood, however, firing Powell would just be the first step in dismantling the Fed’s independence,” Ashworth noted in a recent client briefing. He added that a full board shake-up would be required to effect meaningful change—an aggressive move that could rattle markets, pressure the dollar, and push long-term rates higher.

Power at the Fed Isn’t Dictated—It’s Shared

There’s also a procedural complexity. While the President appoints members of the Board of Governors, the FOMC is a collective decision-making body, and its chair is often selected by consensus rather than dictated by title alone. This means that even if Trump were to replace Powell, other committee members might resist aligning monetary policy with political preferences.

Michael Feroli, chief U.S. economist at JPMorgan, pointed out that much of the Fed Chair’s influence stems from institutional tradition rather than legal mechanics. “Most of the power of the leadership stems from the historical deference,” he wrote, highlighting how the Fed’s authority is based on precedent and credibility rather than rigid command.

Pushback Within the Fed Could Stall Any Shift

Peter Sidorov of Deutsche Bank emphasized that a unilateral move to install a more compliant leader could backfire. “Monetary policy actions are taken by majority vote,” Sidorov explained. “Removing Powell could lead to increased pushback from other members against pressure on the Fed to deliver easier policy.”

Trump’s criticisms have intensified in recent days, including a social media post labeling Powell “a major loser,” triggering market volatility. The White House’s economic advisor Kevin Hassett confirmed last week that options for removing the Fed chair were actively being discussed, though the legal standing remains murky.

Legal Barriers and a Watchful Supreme Court

Powell’s current term as Fed Chair ends next year, and he has previously stated his belief that a president cannot legally remove him mid-term. A pending Supreme Court case on presidential authority over federal board members may eventually clarify the legal boundaries.

Markets Are Already Feeling the Pressure

Meanwhile, markets are reacting with visible unease. U.S. equities, bonds, and the dollar have all shown signs of stress amid the uncertainty, with investors increasingly concerned about both policy direction and institutional stability.

Feroli warned that undermining the Fed’s autonomy could accelerate inflation risks, especially in a climate already pressured by tariffs and elevated expectations. “It has been hoped that these adverse consequences would dissuade the president from threatening Fed independence,” he said. “Though so far, the president has often followed through on his intentions.”

Protect Yourself From the Coming Shakeups

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