Will Trump seek to limit the Federal Reserve's independence?

Donald Trump has sent mixed messages on what he wants to do with the Federal Reserve. While he maintained the President should not have the authority to direct the FED, he did indicate the President should have a "say" on interest-rate policy.

Although Trump had considered removing FED Chair Jerome Powell from his position in 2018, he ultimately decided to let him finish out his term. However, Trump said he would not reappoint him.

On November 7, Powell said he would not step down even if Trump asked him to. Appointing new members to the FED board is the President's primary means of exerting direct influence on the central bank. A Fed Chair serves four-year terms, whereas governors serve fourteen-year terms.

Usually, US presidents tend to reappoint their predecessor's FED Chair. However, Trump has been the exception in recent decades. In 2026, Trump will have the chance to appoint a new head of the FED when Powell's tenure as chair ends. Trump will have one more opportunity to choose a FED board member in 2028 when Powell's fourteen-year tenure as governor concludes.

After Adriana Kugler's tenure as FED governor ends in January 2026, there will be another chance. However, those roles only account for a fraction of the FED.

The presidents of the 12 regional FED banks and seven governors make up the FED's 19 policymakers. It is the fed directors that choose the 12 regional presidents.

Also, the Senate must confirm the President's nominees for FED Governor, Chair, and Vice-Chair posts. This is to make sure checks and balances are correct. The Republican party, which Trump led in 2017–2021, also controlled the Senate, similar to the latest election results on November 5th.

However, several of Trump's FED appointees were blocked by senators back during his first term. For a president, removing the FED Chair is a direct method of sending a message. The Federal Reserve Act states in section 10 that the chair and other members are subject to being "removed for cause by the president."

The term "cause" has always been understood by legal experts to refer to misconduct or misuse of authority. Since the law is not clear on "cause," the question of whether a President can fire the FED Chair becomes tricky.

During his campaign, Trump hinted that he would try to sway the FED's policy-making process. The difficult legal process of extreme decisions makes the President's sway on the independent-FED a little tricky.