Trump’s threat to fire Powell escalates pressure on Fed independence and Warsh confirmation

Federal Reserve Chair Jerome Powell has no intention of leaving his seat on the central bank’s Board of Governors when his term as chair ends on May 15, and he may stay beyond that, a stance now hardened by an ongoing criminal investigation and President Donald Trump’s threat to fire him. Trump, in a Fox Business interview, said he would remove Powell from the board if he didn’t leave voluntarily, citing an investigation by U.S. Attorney Jeanine Pirro into cost overruns at the Fed’s Washington headquarters. The probe, which alleges Powell may have made misstatements to Congress, has not produced public charges, and a federal judge previously denied grand jury subpoenas—yet Pirro’s office made an unannounced site visit this week, signaling continued pursuit.

Powell, appointed chair by Trump in 2018 but since acting independently, has resisted pressure to cut interest rates amid inflation above the Fed’s 2% target. His decision to remain on the board until the investigation concludes with “transparency and finality” disrupts the administration’s effort to install Kevin Warsh, Trump’s nominee for chair, who has pledged deeper rate cuts. Warsh can only join the seven-member board if a seat opens—either through Powell’s departure or the exit of Stephen Miran, a Trump appointee whose term has expired but who remains in office.

Currently, three of the seven governors were appointed by Joe Biden, limiting Republican control. With only three Trump appointees—including Powell and Christopher Waller, who is seen as unlikely to follow political directives—shifting the board’s balance is essential for Warsh to enact administration-backed monetary shifts. But the Pirro investigation has triggered backlash, including from Republican Senator Thom Tillis, who has vowed to block Warsh’s confirmation until the probe is dropped, calling it a baseless attack on the Fed’s independence.

Warsh’s confirmation hearing is set for April 21. Treasury Secretary Scott Bessent expressed confidence in a timely confirmation, but the standoff reveals a deeper tension: the Federal Reserve’s ability to operate free of political coercion, a cornerstone of its credibility. If Warsh is confirmed and gains a majority, he could pursue rate cuts unsupported by economic conditions, risking renewed inflation. The ultimate consequence is not just a leadership change, but a test of whether the Fed’s institutional independence can survive an administration willing to weaponize investigations and threats to control monetary policy.