Jerome Powell Should Be Fired and Not Just Over Interest Rates

In the summer of 1988, Democratic presidential candidate Mike Dukakis held a lead over George H.W. Bush, but that advantage evaporated quickly. A photo opportunity where Dukakis posed in a military tank, complete with an awkwardly fitting helmet, backfired spectacularly when Republicans turned it into a devastating ad campaign. The imagery portrayed him as an out-of-touch intellectual pretending to be tough, ultimately costing him the election—and many agreed it was a fair assessment for someone unfit for the presidency.

A similar awkward moment unfolded on July 24, 2025, when President Trump and Federal Reserve Chair Jerome Powell toured the Fed’s under-construction headquarters—a lavish $2.5 billion project dubbed a “Taj Mahal.” Both men wore hard hats, but while Trump, a seasoned real estate developer, appeared at ease and dominant in stature, Powell seemed uncomfortable and out of place, like an economist thrust into an alien environment. Trump highlighted the project’s notorious cost overruns during the visit, though Powell corrected him on the exact figure, noting it wasn’t quite as inflated as claimed—yet still excessively high.

Trump’s primary motivation for wanting Powell removed stems from the Fed chair’s reluctance to cut interest rates and stimulate economic growth. However, the construction-site episode, orchestrated by Trump to underscore Powell’s unease, served as a fitting symbol—much like Dukakis’ tank mishap—suggesting broader reasons why Powell might need to step down sooner rather than later. While the event could be dismissed as typical Trump theatrics, where he excels at commanding attention and Powell struggles even with core responsibilities like rate-setting, it highlights deeper issues.

The Importance of Fed Autonomy

It’s not a position taken lightly: Calls to oust Powell risk undermining the Federal Reserve’s independence, a cornerstone principle enshrined in the Federal Reserve Act of 1913. This autonomy ensures the central bank isn’t swayed by political pressures, such as presidential demands for rate cuts to boost the economy artificially. Without it, investors might view U.S. debt as vulnerable to inflation, leading to a refusal to buy bonds and triggering a financial catastrophe far worse than the 2008 crisis. Global confidence in U.S. debt underpins the nation’s standard of living.

Moreover, prematurely slashing interest rates could be ill-advised, especially amid potential inflation from Trump’s proposed tariffs. Yet, justifying Powell’s tenure based on preserving independence is challenging given his track record. Appointed by Trump in 2017 during his first term, Powell clashed with the president over demands for lower rates amid a booming economy fueled by tax cuts. Initially resistant—correctly, as the economy was overheating—Powell eventually yielded and implemented significant rate reductions.

This capitulation forms the first major critique: Powell demonstrated a lack of true independence. Those pre-COVID cuts depleted the Fed’s toolkit, leaving fewer options for injecting liquidity during the pandemic lockdowns.

Persistent Money Printing and Inflation Mismanagement

The second key issue arose during the COVID-19 crisis, when Powell deployed every available measure to flood the economy with money, essentially printing it prolifically. Even after restrictions lifted and the pandemic subsided, he continued this aggressive approach, maintaining near-zero interest rates well into the Biden administration. (Powell was reappointed by President Biden to a term ending in 2026.)

This persisted as Biden’s policies racked up trillions in spending, ballooning national debt and priming the pump for inflation. Powell, in coordination with Treasury Secretary Janet Yellen, downplayed the risks, labeling the emerging inflation as “transitory.”

Far from temporary, inflation surged to 9.1%, marking one of the gravest errors in Fed history. Only then did Powell hike rates aggressively. Combating inflation is central to the Fed’s mandate, and its unchecked rise acts as a regressive tax, disproportionately burdening working-class families unable to hedge through investments.

Admittedly, endorsing Trump’s desire to replace Powell aligns with the president’s goals but for different rationales. Tariffs might drive up prices, and premature rate cuts could exacerbate inflation further. Removing Powell before his term concludes could spark a major constitutional showdown. Nonetheless, Powell’s pattern of policy missteps—from yielding to political pressure to mishandling inflation—and even his awkward presence at the headquarters tour make a compelling case for change. His departure, sooner rather than later, could benefit the institution.