President Donald Trump has sharply escalated his conflict with Federal Reserve Chair Jerome Powell. Trump threatened to fire Powell if he does not vacate his position on time. The warning came during a Fox Business interview with Maria Bartiromo on Wednesday. Trump accused Powell of doing “a bad job” for refusing to cut interest rates.

The dispute between Trump and Powell has entered a new and dangerous phase. Trump told Fox Business he has long wanted to remove Powell from the role. “I’ve held back firing him. I’ve wanted to fire him, but I hate to be controversial,” Trump said. He added that if Powell stays beyond his term, he will act.

Powell’s term as Federal Reserve Chair expires on 15 May. However, Powell plans to remain in the role until his nominated successor wins Senate confirmation. Trump’s chosen replacement is Kevin Warsh. Warsh still awaits a confirmation hearing in the Senate.

Powell Vows to Stay Until Successor Is Confirmed

Powell has clearly stated his intention to stay on as acting chair if necessary. “That is what the law calls for,” Powell told reporters last month. He also holds a seat on the Fed’s governing board until 2028. Powell has said he will not resign until the Justice Department concludes its ongoing investigation.

That investigation centres on cost overruns at the Federal Reserve’s headquarters renovation project. Prosecutors have examined Powell’s statements to Congress about those renovation costs. Trump showed no willingness to drop the probe during the Fox Business interview. “Whether it’s incompetence, corruption, or both, I think you have to find out,” Trump said.

Three officials from the office of US Attorney for DC, Jeanine Pirro, made a surprise visit to the Fed renovation site on Tuesday morning. The officials were Carlton Davis, Steven Vandervelden, and Matthew Fox-Moles. The Wall Street Journal first reported the unannounced visit. POLITICO confirmed the visit through a source granted anonymity.

Federal Judge Questions True Purpose of DOJ Probe

A federal judge has already challenged the legitimacy of the Justice Department’s investigation. Judge James Boasberg ruled last month that cost overruns served as a mere pretext. He concluded the real purpose was to intimidate the central bank. Boasberg blocked the DOJ’s subpoenas as a result.

“The Government has offered no evidence whatsoever that Powell committed any crime other than displeasing the President,” Boasberg wrote. He added that the subpoenas aimed to “harass and pressure Powell either to yield to the President or to resign.” Despite this ruling, prosecutors have not stepped back from their pursuit. The continued investigation now threatens to delay Warsh’s confirmation significantly.

This confrontation carries enormous consequences for the Federal Reserve’s independence. The central bank sets monetary policy free from direct political interference, and this independence is a cornerstone of the US financial system. Trump’s repeated demands for lower interest rates have alarmed many economists. They warn that political pressure on the Fed undermines financial market stability.

Republican Senator Tillis Blocks Warsh Confirmation

Republican Senator Thom Tillis sits on the Senate Banking Committee. He has threatened to block Warsh’s confirmation entirely. Tillis shares concerns that the DOJ investigation is a political tool. He has said he will not vote to confirm Warsh unless prosecutors drop the Powell probe.

This stance creates a difficult dilemma for Trump. Dropping the investigation would allow Warsh’s confirmation to proceed quickly. But Trump made clear on Wednesday that he refuses to abandon the probe. The president told Fox Business: “Don’t you think we have to find out what happened there? I have to find out.”

Trump nevertheless expressed hope that Tillis would change his position. He described the senator as “an American… he knows what to do.” Trump appeared confident that political pressure would eventually bring Tillis around. However, Tillis has shown no immediate signs of softening his stance.

Senate Republicans Urge End to Powell Investigation

Several senior Republican senators have publicly urged the Justice Department to end its probe. Senate Majority Leader John Thune spoke clearly on the matter on Wednesday. “I think it’s in everybody’s best interest to wrap up the investigation,” Thune said. His comment signals growing unease within Republican ranks about the standoff.

Senator Mike Rounds also addressed the situation on Capitol Hill on Wednesday. He sits on the Senate Banking Committee alongside Tillis. Rounds told reporters the probe is not “serving our purpose, which is to help the president get the next Federal Reserve chairman he wants.” His remarks reflect frustration among Republicans eager to install Warsh quickly.

Treasury Secretary Scott Bessent struck an optimistic tone during a White House press briefing. He said he is “very optimistic” that Warsh will win confirmation before 15 May. Bessent pointed out that Tillis himself has praised Warsh as a strong candidate. “Let’s get to the hearings and see where we are,” Bessent said.

Legal Questions Surround Trump’s Authority to Fire Powell

Legal experts have raised serious doubts about Trump’s power to dismiss Powell. It remains unclear whether the president can fire a Fed chair without showing serious wrongdoing. The Supreme Court is currently weighing a related case involving the matter. Trump attempted to remove Fed board member Lisa Cook, and the high court allowed her to remain while the case continues.

Powell also retains the option to stay on the Fed’s governing board until 2028. That means even a dismissal as chair may not fully remove him from the institution. The legal and political battles surrounding the Federal Reserve now seem set to intensify. The outcome will likely shape US monetary policy for years ahead.

The core dispute remains Trump’s repeated demand for lower borrowing costs. Powell and the Federal Reserve have resisted those demands. Trump insists that high interest rates damage the US economy. The standoff shows no clear sign of resolution as Powell’s May deadline approaches.

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