Trump Says He’s Unlikely to Fire Powell Amid Fed Renovation Dispute

Key Insights:

• Trump downplays Fed Chair Powell’s removal, calling dismissal “highly unlikely.”
• Tensions rise over Fed’s $2.5B renovation project and Powell’s rate stance.
• S&P 500 and Treasury yields react to shifting signals from the White House.

President Trump stated on Wednesday that he is “highly unlikely” to fire Federal Reserve Chair Jerome Powell. His remarks came hours after reports suggested Trump discussed dismissing Powell during a private meeting with House Republicans. The news initially triggered a dip in U.S. equities and volatility across bond markets.

During an Oval Office meeting with Bahrain’s crown prince, Trump cited fraud as the only condition under which Powell could be removed. This followed internal criticism over cost overruns in a $2.5 billion Fed renovation project. The Fed has denied wrongdoing and asked its inspector general to review the matter.

Reports of a possible Powell dismissal triggered a 0.5% drop in the S&P 500 earlier. Treasury yields also shifted sharply before trimming losses after Trump’s clarification. Markets have remained sensitive to signs of Fed politicization ahead of Powell’s 2026 term expiration.

Senate Pushes Back as Fed’s Independence Draws Support

Republican senators expressed concern about the implications of firing the Fed chair over policy disagreements. Senator Thom Tillis warned of serious credibility risks for U.S. financial institutions if the Fed loses independence. Tillis emphasized that placing the Fed under direct presidential control would be a strategic mistake.

Senator John Kennedy said Powell had done a “decent job” despite some policy disagreements. Senate Majority Leader John Thune added that Trump currently has no firm intention to fire Powell. The House Financial Services Committee canceled a scheduled meeting with Powell due to voting conflicts.

Trump nominated Powell in 2017 and Biden reappointed him in 2021. Powell has repeatedly stated his commitment to serving his term through May 2026. Treasury Secretary Scott Bessent has confirmed that the formal process to find a possible successor is already underway.

Bitcoin rose from $116.8K to $119.2K throughout the day, gaining momentum during the London and New York sessions. The Asian session opened with minor selling, but strength returned as risk sentiment improved. BTC’s intraday move reflected easing market tension over Powell’s position and stable rate policy outlook.