President Donald Trump’s patience with Federal Reserve Chairman Jerome Powell had reportedly run out over the central bank head’s ignoring White House demands to lower interest rates. The New York Times reported the morning of July 16 that Trump had drafted a letter terminating Powell, whose term expires in 10 months. CNBC reported that House Republicans, informally polled by the president during a meeting the prior day, expressed approval for the firing.
By noon, Trump publicly put the story to bed.
“We’re not planning on doing it — it’s highly unlikely,” Trump told reporters in the Oval Office. “I don’t rule out anything, but I think it’s highly unlikely unless he has to leave for fraud.”
Although Trump teased the possibility that the Fed’s $2.5 billion headquarters renovation could constitute fraud, investors across the planet exhaled a major sigh of relief, accepting Trump’s decision as final. At least for now.
It’s possible that Trump was seriously on the cusp of firing Powell, a move likely to face legal challenges, though that wouldn’t even necessarily evict Powell from the Federal Reserve’s Italian Renaissance and Beaux Arts-style headquarters in Washington, just off the National Mall. Powell’s term as chairman of the Federal Reserve ends on May 15, 2026, but his term on the Fed’s Board of Governors extends to Jan. 31, 2028.
More likely, the White House leaks constituted a strategic trial balloon to see how terminating Powell would be received by the markets. In just a handful of hours, the verdict from investors was clear: “Don’t do it, Don!”
Before any reports about the possible Powell ouster, the 10-year Treasury was trading at 4.447%, the 30-year at 4.996%, and the dollar index at 98.5.
About a quarter past 11 a.m. that day, the CNBC report citing a senior White House official was first published, and by 11:29 a.m., the Grey Lady posted its scoop about the draft letter.
By 11:35 a.m., the 10-year yield was up four basis points, the 30-year up more than seven, and the dollar index was down more than 0.7%. All three major indices on the New York Stock Exchange tanked. But that’s beside the main point, which is that the actual interest rates that matter for Trump, the Treasury yields that determine how much interest we have to pay on new and maturing national debt, were skyrocketing. And that’s the exact opposite outcome of what Trump wants out of possibly firing Powell.
Unlike former President Joe Biden, who tripled down on terrible policies such as his open-border amnesty and illegal student loan debt cancellation even as objective metrics such as border crossings and inflation continued to soar, Trump responds to reality and triangulates accordingly. When 60 days of diplomacy with the Iranians failed to bear fruit, he decimated the regime’s nuclear weapons capability on the 61st. When his ridiculous schedule of “reciprocal” tariffs tanked the bond and stock markets after “Liberation Day,” he reversed course, announced the 90-day pause, and has since deployed his Cabinet to secure trade deals instead.
TRUMP EYES OPPORTUNITY TO OUST POWELL IN $700 MILLION OVERRUN ON FED BUILDING EXTENSION
So, at the risk of sounding like an optimist, it seems likely that Trump has received conflicting counsel over firing Powell and leaked the possibility as a test, with the response overwhelmingly negative.
Trump can punish Powell if he wants, but he can’t control the bond market. Trump’s best bet is to wait and continue to deliver the real wage growth and deregulation that will bring back demand to stateside and make America great again.