The public clash and dispute between Donald Trump and Fed Chair Jerome Powell is heating up over the Fed’s decisions regarding interest rates. Legal precedents stop Trump from firing Powell from the Fed and advise him that he cannot fire Powell for policy disagreements.
As a response to this issue, Trump allies are putting constant pressure on Powell. The rate cut process initiated by Donald Trump could boost crypto for a short period of time. But if we analyze them over a long period of time, they could deliver long-term instability and put immense pressure and risk on assets like Bitcoin.
Can Trump Fire Jerome Powell over Policy Disagreements?
As per the current scenario and existing legal compliances, Donald Trump cannot fire Jerome Powell over policy disagreements alone. The Federal Reserve is considered an independent agency, and its Board of Governors can only be removed if there is any serious misconduct, inefficiency, or neglect of duty, not some policy disagreements or policy decisions, like interest rates, that will not be enough to fire the Fed chair.
The Fed’s recent decision regarding the interest rates and the way of handling a renovation project at the Federal Reserve headquarters are the sole reasons for the strained relationship between Trump and Powell. Trump has reportedly advised the Fed to reduce the interest rates, claiming it would boost the American economy and make borrowing less expensive for both businesses and individuals.
The Fed and Powell followed a more cautious approach and kept the rates relatively high due to the inflation-fighting campaign and to evaluate the impact of Trump’s tariffs, which were implemented recently. This disagreement between them over the policy decisions led Trump to criticize Powell and even call him names like “numbskull,” “Trump Hater,” and a “stubborn mule.
“I talked about the concept of firing him,” Says Donald Trump
President Donald Trump introduced a copy of a draft letter firing the Fed chair, Jerome Powell, at a meeting conducted in the Oval Office with House Republicans last week. As per the media reports, a dozen House Republicans were present at the meeting on July 16. Donald Trump’s final decision on this issue is still unknown, and even the closest people associated with him have no idea whether Mr. Trump will proceed with the termination.
Trump received positive responses for firing Powell at the meeting with Republican lawmakers, and Trump is currently holding him back from making an abrupt decision. Trump stated that he had talked about the concept of firing him. He asked what they thought and mentioned that almost every one of them had said he should, but he was more conservative.
Trump vs Powell: What Does That Mean For Crypto?
The cryptocurrency market has always been susceptible to political events and legal uncertainties. A threat to the Fed’s authority and possible monetary policy changes can increase volatility and have a significant impact on the cryptocurrency market. Some analysts and experts have shared their opinions and concerns over this issue.
Dominick John, an analyst at Kronos Research, stated that any talk of firing Chair Powell unsettles market confidence, especially in crypto, where trust is key. He mentioned that a ‘Shadow Fed’ clouds rate cut signals, boosting volatility and complicating price discovery. He noted that these leadership quarrels often trigger short-term crypto price swings due to uncertainty. He added that if control centralizes with little oversight, crypto could increasingly be seen as a safe haven.
Andrew Rossow, a digital media attorney and CEO of AR Media, stated that while firing Powell might temporarily boost crypto prices due to dollar weakness and rate cut expectations, it would fundamentally undermine the stable financial system that crypto ultimately depends on. He added that crypto might temporarily benefit as a ‘chaos hedge’ against dollar weakness and Fed politicization; however, in the long run, maintaining a destabilized U.S. financial system could hurt a significant, if not the majority, of risk assets, including crypto.
However, Trump hasn’t made any decision regarding the potential firing of Powell, and the sensation has created enough buzz on the cryptocurrency market. This speculation has incited and fueled news that a future pick for the Fed chair might cut interest rates and lift asset risks. The experts share that the interest cut is sure at least for a short period of time.
