Trump says he won’t fire Fed chair, days after hinting otherwise and triggering market dip

WASHINGTON - President Donald Trump said Tuesday he plans to keep Federal Reserve Chair Jerome Powell in place — just days after roiling financial markets by suggesting Powell could be on his way out.

The reversal comes amid growing investor unease over the administration’s influence on monetary policy, as Trump continues to pressure the Fed to cut interest rates in response to what he claims is fading inflation.

"I have no intention of firing him," Trump told reporters, signaling a possible retreat from the threats that triggered last week’s selloff.

Why is Trump upset with the Fed?

The backstory:

Trump’s frustration stems from the Fed’s decision to pause interest rate cuts, despite his insistence that inflation has cooled. The central bank’s benchmark rate currently sits at 4.33%, a full percentage point lower than last August, yet Trump argues that grocery and energy prices are falling fast enough to justify further cuts.

"It’s all coming down," Trump said Tuesday. "We think the Fed should lower the rate… and we’d like to see our chairman be early or on time, as opposed to late. Late’s not good."

His criticism has only intensified in recent weeks. On Truth Social Monday, he reiterated, "there is virtually No Inflation." Last Thursday, he went further, writing, "Powell’s termination cannot come fast enough!"

What’s the Fed’s response to Trump’s pressure?

The other side:

Fed Chair Jerome Powell has remained publicly committed to resisting political interference, emphasizing the central bank’s independent role in stabilizing prices and maximizing employment.

FILE - L to R) U.S. President Donald Trump looks on as his nominee for the chairman of the Federal Reserve Jerome Powell takes to the podium during a press event in the Rose Garden at the White House, November 2, 2017 in Washington, DC. (Photo by Drew Angerer/Getty Images)

Last week, Powell warned in a speech at the Economic Club of Chicago that Trump’s tariff policies—another source of economic tension—could trigger both slower growth and renewed inflation.

"The level of tariff increases announced so far is significantly larger than anticipated," Powell said. "The same is likely to be true of the economic effects which will include higher inflation and slower growth."

Will Powell be fired or finish his term?

What's next:

Although Trump suggested last week that he believed he had the power to remove Powell—saying, "If I want him out, he’ll be out of there real fast, believe me"—his Tuesday comments appear to walk that back. Powell’s term as Fed chair is set to expire in May 2026.

While the White House can demote a Fed chair from the leadership role on the Board of Governors, firing him outright without cause would trigger a legal challenge, something past administrations have avoided.

For now, Trump says Powell is staying—though the tension between the White House and the Fed remains high, with the direction of interest rates at the center of the dispute.