Why would the White House need to deny something it never announced? The question hangs in the air as Washington officials firmly state they have no plans to remove Federal Reserve Chair Jerome Powell from his position.
The White House denies plans it never announced while Washington watches the Powell situation with growing unease.
This clarification comes at an interesting time, given the Justice Department recently launched a criminal investigation into Powell regarding his June congressional testimony about Federal Reserve headquarters renovations.
The investigation centers on Powell’s statements about an ongoing renovation project. Legal analysts examining the case have described it as a “baseless criminal probe.” Powell himself characterized the investigation as part of a broader pattern of administration threats and ongoing pressure. He has requested the Federal Reserve inspector general review the renovation project amid the controversy.
The situation gets complicated when you consider Powell’s legal protections. Federal Reserve Board governors cannot be removed except for “cause,” which means inefficiency, neglect of duty, or malfeasance in office. Powell’s term as a board governor extends until January 2028, even though his chair position could potentially face different rules. The Supreme Court will examine this exact question in an upcoming case called Trump v. Cook.
Behind the scenes, tensions have been building over interest rate policy. The Trump administration has expressed unhappiness with Powell’s reluctance to support rapid interest rate reductions. The president wants to stack the seven-member Federal Reserve board with officials who favor steep rate cuts. Controlling a majority would enable key decisions about personnel, regulation, and organizational matters. Such shifts could directly affect markets through the interest rate channel, influencing borrowing costs and asset values.
The administration has already taken action against other Fed officials. They released Governor Lisa Cook’s old mortgage application as part of an investigation. If Cook gets removed, it could create a pathway for dismissing other governors, including Powell.
Markets watch nervously because uncertainty about leadership creates confusion about policy direction. If Powell stays longer than expected, he would serve as a powerful counterweight to any Trump-appointed successor. Powell was reappointed by President Biden in 2022 after his term under Trump expired. Investors struggle to plan when they cannot predict which policymaker holds real influence. Senator Thom Tillis has vowed to oppose Trump’s Fed picks until the subpoena matter is resolved. The whole situation creates unnecessary turbulence in an institution designed for stability.
