Fed Chair Jerome Powell will file a lawsuit against President Trump in the event that he attempts to terminate him

Jerome Powell will sue if Trump fires him as Fed Chair to preserve the central bank’s independence.

Jerome Powell has threatened to sue if Trump fires him. He’s said it a hundred times: don’t fire the Fed chair because the Oval doesn’t like interest rate policy.

These men have a strange yet funny connection. Trump personally recruited Powell in 2016 for his first term. They clashed in 2018.

Trump wanted the Fed to decrease rates, but Powell maintained them high to control inflation. Trump didn’t like that. He considered dismissing Powell, and his irritation was clear.

The Fed chair threatened then-Treasury Secretary Steven Mnuchin with legal action if Trump sought to remove him. He meant it seriously. He termed it “setting a terrible precedent.”

Today, Trump is returning to the White House. Powell is sticking to his guns. Recently asked whether Trump could dismiss him, Powell said, “Not authorized under the law.”

This ancient conflict is back in the limelight because to Trump. Trump’s effort to oust Powell may spark a historic court fight that might upset financial systems and the economy. The Fed has planned this clash for years.

Fed leaders prepare behind the scenes. Scott Alvarez, the Fed’s chief legal counsel from 2004 to 2017, said Powell would never be a political pawn.

“If the president succeeds at this, it would imply every future chair is susceptible to dismissal at the whim of the president,” Alvarez said. Powell will not allow Trump or anybody else get such authority, he believes. Alvarez claimed Powell would fight until the end.

Powell, a lawyer and private equity veteran, understands his rights. He considered this. He claims he’ll fight with a legal team.

Powell is willing to pay for his own legal defense. It’s not about money for him. Removing the Fed chair for doing their job is about making sure they’re not simply another political appointment.

This twist is much funnier. Trump has never confirmed he will dismiss Powell. Indeed, SEC Chair Gary Gensler. But Powell? No.

Trump allegedly told Bloomberg in June that he would let the Fed head “serve it out,” if he was “doing the right thing.” Trump may alter his mind.

He has blasted every Powell move under Biden, but that’s more about Biden than Powell. Trump investment manager and advisor Scott Bessent recommended a “shadow” Fed chair to undercut Powell. Bessent eventually withdrew the notion following criticism, but its mere mention shows where some of Trump’s friends stand.

Some of his aides want more. They dislike the Fed being “independent” and unaccountable to the White House. The Fed’s independence has been exaggerated, and the Constitution doesn’t forbid it from answering to the president.

Fed reform couldn’t come at a worse time. Powell has been raising interest rates to manage inflation, which is a beast. Short-term and long-term interest rates are significantly higher than under Trump.

Any attempt to remove Powell, particularly during this inflation war, may devastate global markets, including crypto. Bitcoin only started moving after Trump’s election. The top crypto was poised to reach $90,000 at publication time.

Trump has vowed to cut inflation and interest rates. “Inflation, remember, it is a country buster,” he remarked in May, suggesting excessive borrowing prices might undermine the economy. He’s said he’ll find someone who meets his objectives if the Fed doesn’t.

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