Catenaa, Monday, July 21, 2025- A senior White House official has warned President Donald Trump that removing Federal Reserve Chair Jerome Powell could trigger a “massive market reaction,” according to Rep. Jim Himes of Connecticut.
Speaking on CBS’s “Face the Nation,” Himes said the internal warning, possibly from Treasury Secretary Janet Yellen, highlighted the risk of capital market instability if Trump follows through on his threats to fire Powell.
Trump has grown increasingly frustrated with the Fed’s resistance to rate cuts, blaming Powell for slowing the economy as tariffs and election pressures mount.
Reports suggest Trump is eyeing the central bank’s $2 billion headquarters renovation as a pretext to dismiss Powell.
However, Himes said any such justification would not hold in financial circles, which he noted are highly sensitive to political interference in monetary policy.
Trump, who appointed Powell during his previous term, has long clashed with the Fed chief over interest rates. Republican senators, even some loyal to the president, have urged caution, warning that firing Powell could undermine the Fed’s independence and shake investor confidence in U.S. monetary stewardship.
Sen. John Kennedy of Louisiana reaffirmed his position that no president has the authority to dismiss a sitting Fed chair, signaling potential legal and constitutional pushback.
The Hill reported that it has reached out to both the White House and Treasury for comment as tensions mount over the Fed’s leadership.
