Trump wants to fire Powell? What impact will it have on the crypto market?

Powell did not send a signal of a rate cut at yesterdays Chicago Economic Club event. The most anxious person is Trump.

The president, who has been struggling with tariffs for more than a month, is obviously angry about the Feds decision not to cut interest rates. He has been attacking Powell: If I ask him to, Fed Chairman Powell will leave. I am not satisfied with him (Powell). I dont think Powell is doing a good job. Powell is slow to respond and slow to act. Powell is playing politics, and interest rates should be lowered now. The people at the Fed are not very smart, Powell is terrible. Powell is someone I never liked very much. Powell strongly defended the independence of the Fed, refuted political interference, and said that the Fed will make decisions only based on what is best for the American people.

Trump challenges Fed independence

Trump has never concealed his disappointment with Powell. On April 17, 2025, he told reporters in the Oval Office: If I want him to go, believe me, he will be gone soon! Later, he wrote another article on Truth Social urging Federal Reserve Chairman Powell to cut interest rates, The European Central Bank is about to cut interest rates for the seventh time, and the Federal Reserves Mr. Always Late Powell has messed up everything again. Yesterday he threw out another typical chaotic report – oil prices are falling, food prices are falling, even eggs are falling in price, and the United States is making a lot of money through tariffs. This half-beat should have cut interest rates like the European Central Bank, and now it is even more urgent, and Powells countdown to step down should be accelerated!

Trumps anger is mostly due to Powells conservative attitude on monetary policy. He believes that Powell failed to cut interest rates sharply in a timely manner and missed the window to stimulate economic growth. What makes Trump even more dissatisfied is that the Feds high interest rate policy conflicts with the tariff plan he has implemented since taking office. Trumps tariff policy is aimed at protecting domestic industries in the United States, but it may push up the prices of imported goods, thereby exacerbating inflationary pressure. The Yale University Budget Lab estimates that these tariffs are equivalent to an actual tax burden of $4,900 per American household. Against this background, Trump hopes that the Federal Reserve will ease economic pressure by cutting interest rates and escort its policies.

As for whether Trump wants to fire Powell, although he told reporters in public that he does not regret nominating Powell, the WSJ report may give us some clues. Sources said that Trump had privately discussed with former Federal Reserve Board member Kevin Warsh about replacing Powell.

What are the obstacles to firing Powell?

Can Trump really fire Powell as he wishes? The answer is not simple.

Under the Federal Reserve Act, the Fed chairman and board members can only be fired for cause, usually misconduct, malfeasance, or inability to perform their duties, rather than policy disagreements. No Fed chairman has ever been directly removed from office by the president, and this legal framework provides a solid guarantee for the Feds independence. Powell himself has made this clear. In November 2024, when asked if he would resign if Trump asked him to, he answered emphatically: No.

In addition, Powells tenure also provides him with protection. He was initially nominated by Trump as Fed chairman in 2017 and was re-nominated by Biden in 2022. His term as chairman will last until May 2026. Sarah Binder, a senior fellow at Brookings, pointed out that courts generally do not regard disagreements on interest rate setting as legitimate reasons, so Trump may face legal challenges if he forcibly fires Powell.

Even if the law allows, firing Powell is politically risky. The independence of the Federal Reserve is not only a legal issue, but also the cornerstone of market confidence. Binder warned that the presidents attempt to oust Powell would increase market uncertainty and shake the publics trust in the Federal Reserve. This could lead to sharp fluctuations in the stock and bond markets, and even affect the 加密貨幣currency market. After all, although crypto assets are advertised as decentralized, their prices are still strongly affected by the macroeconomic environment and investor sentiment.

Trumps aggressiveness has even worried some of Powells critics. Senior Democratic Senator Elizabeth Warren said undermining the Feds independence could trigger a market crash.

Although there are two amulets of law and market, this does not mean that Powells position is not threatened. The U.S. Supreme Court is currently hearing a case involving the presidents power to dismiss senior officials of independent agencies. Although the case is not directed at the Federal Reserve, but at the National Labor Relations Board and the Merit Protection Board, the verdict may provide a legal basis for Trump. Although the 1935 Humphrey Executors v. United States case established a precedent restricting the president from dismissing the leaders of independent agencies without cause, todays conservative Supreme Court may review this ruling. If the court tends to expand presidential power, Powells position may really be in jeopardy.

In addition, Powells support is not unbreakable. Powell faces more questions now than in Trumps first term. Some believe that the Feds actions to curb inflation in 2022-2023 were too slow, leading to policy mistakes. Allies within the White House believe that Trumps post on Thursday morning was more of an attempt to disrupt Powells position and portray him as a scapegoat for economic problems in the future, which could weaken his public support and increase the risk of being replaced.

What is the impact on the crypto market?

Perhaps firing Powell is not the most critical issue. For Trump, the goal this time seems to be to pressure the Federal Reserve to open the floodgates and stimulate economic growth by significantly cutting interest rates.

Rate cuts usually mean increased liquidity, lower purchasing power of the dollar, and higher inflation expectations. In this environment, cryptocurrencies, especially Bitcoin, known as digital gold, can attract capital inflows. Looking back at 2020, the Federal Reserve lowered interest rates to near zero in response to the epidemic, and the price of Bitcoin soared from less than $10,000 to $67,000 at the end of 2021, setting a record high. Similar scenes may be repeated under Trumps pressure to cut interest rates.

In addition, Trumps tariff policy may further push up inflation. According to Powells warning, tariffs may lead to higher prices for imported goods, squeeze household budgets, and push up prices. Yale Universitys estimates show that the inflationary effect of tariffs is equivalent to an increase of $4,900 in actual tax burden per household. Under inflationary pressure, investors may turn their funds to mainstream currencies such as Bitcoin, or even chase high-risk altcoins, setting off a bull market boom.

Furthermore, if the Federal Reserve loses its independence due to political pressure, the credibility of the U.S. monetary policy may be damaged. DeFi and blockchain technology are a supplement to the defects of the traditional financial system. If the Federal Reserve is politicized, it may accelerate investors disappointment with the U.S. dollar system and drive funds into DeFi and other ecosystems.

However, rate cuts are not a panacea. In a speech to the Economic Club of Chicago yesterday, Powell warned that Trumps tariff policy could push the US economy into a stagflation dilemma – high inflation and slowing economic growth. This environment will make the Feds dual mission (stable prices and maximum employment) extremely complicated.

In a stagflationary environment, the Federal Reserve may face a dilemma: cutting interest rates to stimulate the economy may exacerbate inflation, while maintaining high interest rates will suppress growth. For the cryptocurrency market, this means drastic price fluctuations.

This game between Trump and Powell may eventually turn into a war of attrition with no winners, and what will be hurt is market confidence and economic stability. History tells us that the cost of political intervention is often paid by the wallets and supermarket bills of ordinary investors.

This article is sourced from the internet: Trump wants to fire Powell? What impact will it have on the crypto market?

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